EUR/USD: outlook for January 16-20
During the past week, EUR/USD tested higher levels. The weaker US dollar and stronger industrial production in the euro area drove the pair to the upside.
At the same time, the single currency didn’t manage to step far from its recent lows. Political uncertainty keeps limiting the bulls. The ECB December meeting minutes showed that, despite improvement in the data, low inflation still remains a concern.
In the new week pay attention to the following releases: the region’s trade balance on Monday, German ZEW economic sentiment on Tuesday and final CPI on Wednesday. The European Central Bank will have its first 2017 meeting on Thursday. The minutes also showed that "a few members" of the central bank’s Governing Council rejected proposals to continue quantitative easing beyond March. However, the ECB is not likely to change its approach in January keeping its monetary policy extremely loose. As a result, if the US currency starts gaining strength again, the euro probably will not be able to keep rising.