The euro rallied 0.70% overnight on the back of the ECB minutes. The more hawkish ECB minutes pushed the EURUSD above 1.20 on a daily closing basis.

The minutes to December 13-14 European Central Bank policy meeting showed “recent indicators pointed to a continued robust and increasingly self-sustaining economic expansion”.

The ECB minutes also showed the euro had remained broadly stable and US Commodity Futures Trading Commission numbers suggested that the market remained positioned for an appreciation of the euro.

The euro bullish reaction to the ECB minutes led by the expectations that the ECB is edging toward removal of the stimulus. The 10y Bund and German government debt yields rose after the minutes.

We believe in 2018/2019 the ECB policy likely to dominate the Fed. We retain bullish targets of 1.2300 and 1.2500.

At higher time frames while holding 1.1550 Nov 2017 low, the EURUSD will rally further ahead (below chart)

In the near term, while holding 1.1900, the uptrend will continue for 1.2120 and 1.2190.

Euro score board:

EURUSD 0.70%, EURCAD, EURGBP and EURJPY 0.50% each, EURUAD marginally up 0.10% and EURNZD down 0.10% (Time 7.30Am AEST).

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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