The pair euro / dollar keeps sideways movement ahead of the meetings of the US Federal Reserve and the ECB

On Tuesday, December 14, trading in the euro closed down. The euro fell 0.22% to 1.1259. During European trading, the price rose to 1.1324 amid a general weakening of the dollar and a decline in the yield on 10-year bonds. The decline in quotations resumed after the revision of the GDP by the German IFO institute and the publication of a report on manufacturing inflation in the United States.

Germany's IFO has revised its GDP growth forecasts for Germany from 5.1% to 3.7% for 2022 amid a slowdown in economic recovery due to supply chain disruptions and the fourth wave of coronavirus. The forecast for GDP growth by 2023 has been raised from 1.5% to 2.9%. GDP is expected to contract by 0.5% in Q4 2021. The GDP growth forecast for 2021 is left at 2.5%.

The US Producer Price Index (PPI) rose 9.6% year-on-year in November. This marked a new all-time high that was recorded in 2011 and beat economists' forecast by 9.2%. Month-on-month at 0.8% in November, also well above expectations for 0.5% growth.

The data reinforced expectations that Fed policymakers will tighten monetary policy next year. By the close of the day, the euro fell to 1.1254.

Scheduled statistics (GMT +3):

At 12:30 the UK is to publish the October House Price Index.
At 16:15, Canada will present reports: house bookmarks, consumer price index for November.
At 16:30 in the US there are data on retail sales for November, a manufacturing index according to the Federal Reserve Bank of New York for December.
At 18:30, the US Department of Energy will provide data on changes in oil reserves.
At 20:00, the head of the Bank of Canada, Tiff Maclem, will deliver a speech.
At 22:00 FOMC decision on rates.
A press conference of the FRS chairman will take place at 22:30.

Current situation:

In Asia, major currencies are trading in positive territory. Currency pairs with the dollar are correcting after yesterday's fall in the evening session. Market participants are awaiting meetings of the world's leading central banks. The Federal Reserve System (FRS) will announce its decision on interest rates today at 22:00 Moscow time. The European Central Bank and Bank of England will announce their decisions on December 16. The press conferences by J. Powell and C. Lagarde are of the greatest interest.

The Fed is expected to announce an acceleration in the pace of phasing out the asset repurchase program in response to continued inflationary pressures. Lagarde has outlined her position, so no one expects surprises from the ECB.

Also, the situation with the spread of the new COVID-19 omicron strain in the world and the potential decrease in economic activity because of this continues to put pressure on investors.

Technical analysis:

The price remains to trade in the price range from November 30th. Sellers have weakened support at 1.1260, so the focus is shifted to the lows of 1.1235 (Nov.30) and 1.1227 (Dec.7). Traders' activity in the market is low. Everyone is waiting for a decision from the US Federal Reserve. The price can go either way.

Summary: on Tuesday, the EUR / USD pair closed lower. Buyers were unable to hold their positions above 1.13, as the German IFO Institute revised downward forecasts for German GDP growth, and manufacturing inflation in the US showed the highest growth in 11 years. Traders' activity in the market is low. Everyone is waiting for a decision from the US Federal Reserve.