Global macro overview for 20/09/2017

Global macro overview for 20/09/2017:

The European Central Bank (ECB) once again tried (ineffectively) verbally intervene against further strengthening of the Euro currency. According to the Reuters agency, "anonymous sources" informed, that there were discrepancies in the Governing Council of the ECB as to the future decision regarding the quantitative easing program. Some representatives from richer countries want a definite end to the intervention, while the presidents of the countries of the south of Europe are merely supporting the idea of reducing the amount of the Euro the EBC spends on the QE. As a result, perhaps the October meeting will be used to reach a compromise on this issue, and final decisions will only be made in December. Meanwhile, the value of the ECB's assets is growing and reached 40% of the Eurozone GBP in August (compared to 28% for the Fed). It is quite obvious that the ECB should end the program in December and not even extend it beyond March next year. Leaders of the Governing Council, however, dominate the "dovish" point of view headed by Mario Draghi, so financial market participants still believe the odds are the QE will also be running in 2018.

Let's now take a look at the EUR/JPY technical picture on the daily time frame. The market just hit the 78%Fibo retracement of the previous swing down at the level of 134.31 and this is the last level of resistance before the test of the long-term high at the level of 141.14 might occur. Nevertheless, the clear bearish divergence between the price and the momentum indicator is likely to make the bears regain control over the market and the technical support at the level of 131.39 will be tested first.

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