ECB and FOMC this week. Stimulus plans and bond purchases are key for the euro this week.

This Thursday, 12/16, important decisions are expected from governors of the European Central Bank who could delay part of a decision on the ECB’s stimulus plans, since the perspective has changed due to a new variant of the coronavirus and the growing pressures on the prices. The ECB’s Governing Council will meet on December 16 to decide whether to end its purchases of emergency bonds in March and how much debt to buy after that date in an effort to stabilize inflation in the euro zone at 2%. Sources in or close to the ECB’s Governing Council said there was an agreement to end the Pandemic Emergency Purchase Program in March, as repeatedly noted by President Christine Lagarde.

Some governors would favor leaving the decision on the bond purchase after March for the next ECB policy meeting on February 3, when the impact of the Omicron variant and the inflation outlook will become better known. They are likely to face some resistance from the ECB’s Executive Board, which has been geared towards making a decision in December and may be wary of upsetting bond investors seeking reassurance.

Given market pressures, another possibility was to design plans in December only for the first few months after the PEPP ends, allowing lawmakers to review their decision in early 2022, the sources added.

EURUSD will remain in market areas with major transitions on Monday 12th and Tuesday 14th December. The preference continues to rise thanks to the market positioning at the close of Friday. The projection on 1.1320 is buy with highs at 1.1320 and 1.1330. By mid-week if the cross remains below the highs we will have bad news for the euro, thus returning sell to 1.13 and 1.1280. If, on the contrary, the market pressure remains above 1.1320 and 1.1330 then the price could reach 1.1350 and up to 1.14. Buy activity will be subject to the notes of the Central Bank of Thursday, December 16.

GBPUSD accompanied the buy market at the close of Friday. Above 1.3250, buyers took control of the minimum zone. The preference remains buyer until 1.33 and 1.3330. The knowledge of inflation on Wednesday and later the notes on the interest rate will be the data responsible for the buyer positioning or take profit of the pound. In contrast to the protagonists of the week EUR and GBP are also crossed by the FOMC on Wednesday at the market close. The dollar remains lower at its crosses. USDJPY below 113.50 we prefer sell up to 113.30 and 113.10. USDCAD below 1.2750 and 1.2720 take profit expected up to 1.27. This price divides the buyers from the sellers and we will wait until Wednesday to establish our position on this.

Commodities gold and silver are projected to rise from tomorrow, December 13. In silver we remain on the rise above 22.0 until 22.10, 22.20 and 22.30. In gold, the key price is 1780.0, above this price, buyers remain on the rise to 1790.0 and possible 1800.0. Commodities would be key for the coming week. Turmoil in inflation, output and interest rate data could catapult metals again.