Euro Rebounded as Draghi Confident in Higher Inflation
By: Eddy Peng Nov 22, 2017Chart 1: Relationship between wage growth and number of employed people
Instead of worrying about weak inflation level, Draghi said they are confident to see that underlying inflation will be eventually driven, showed by evidences that the ECB’s recalibration of its bond-buying program, which monthly asset purchases will be reduced from 60 billion euros to 30 billion euros next year. Overall, the easy monetary policy in the euro-area, including low interest rates, quantitative easing and other measures, will remain for an extended period of time until inflation rates approach a target of 2 percent. Technically, similar with the situation that we have said before, the EUR/USD is still moving in a downward price channel, which started from late August. It retreated after the failed test of breaking the upper channel line, but it seems that the pair wants to attempt again later. The broader outlook for the EUR/USD has been in the support with analysing by Fibonacci retracement, which reveals that it is now bolstered at 1.17304 (23.6% retracement). In the event that it fails to be supported at this level, further decline may occur in the near future.Chart 2: EURUSD Daily