And finally, the European Central Bank has helped push the euro to an intraday high at 1.2159. Although the upward move failed to be as big as we had hoped for when we set our profit targets, euro bulls were able to take some smaller profits at the end of the trading day.
The ECB added, as expected, 500 billion euros and nine months to its bond-buying program but said that additional stimulus may not be needed in full. The relatively restrained comments on how much stimulus will ultimately be deployed have been the trigger for the upward move.
As for the appreciation of the euro, ECB President Christine Lagarde stated that the central bank will carefully monitor the euro’s exchange rate.
The EUR/USD broke above the upper border of the bull flag at 1.2130 and we prepare for a continuation of the euro’s rally – provided that the euro takes out the recent high at 1.2177. A next target could be at 1.2250, whereas the 1.2120-00 area could serve as a short-term support.
Elsewhere, the British pound fell to a low of 1.3245 as Brexit negotiations are on course to end without a trade deal. While market participants prepare for no trade deal after Brexit, it is possible that the two sides could agree on a “friendly no-deal”, allowing talks to resume later in 2021.
We now focus on a trading range in the GBP/USD between 1.3420 and 1.3130.
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