In Anticipation of the ECB Meeting Traders Continue to Sell the EUR (Weekly Review)

Among the most important news of last week was the news from Bloomberg Television that top officials at the European Central Bank are studying the need to revise the inflation target, namely, lowering it. This triggered a new wave of sales of the EUR against its main competitors, in particular against the GBP and the USD. Due to the decline, the EUR/USD again turned out to be near an important support around ​​the 12th figure, the loss of which can increase the pressure on the pair.

The fall of the euro against the pound contributed to certain strengthening of the GBP/USD, but along with political risks in the UK, it failed to develop a large-scale upward trend. Offers in the area of ​​1.2560 successfully restrain the pressure of the bulls, and under the conditions of continuing pressure, the GBP/USD can again test the support of 1.2450, and losing it will jeopardize the breakthrough of the 24th figure. There are no objective reasons for the restoration of the pound at the moment.

The reversal of the trend in the EUR/USD and GBP/USD can be promoted only by technical factors caused by the inability of bears to break through the current minimums. In addition, speculation on the reduction by the US Federal Reserve of the interest rate at 0.50% can also be a reason for the elimination of dollar longs and the development of a correction in these, and not only, pairs. However, before the announcement of the results of the upcoming Fed meeting, it is hardly worth expecting massive USD sales; The EUR/USD may remain in a narrow range until the ECB decides on the rate.

Schedule for this week:

Monday, July 22
10:00 GMT – Germany. Buba Monthly Report;
12:30 GMT - USA. Chicago Fed National Activity (Jun);
15:00 GMT - Japan. BoJ Governor Kuroda Speaks.

Tuesday, July 23
08:00 GMT - Eurozone. ECB Bank Lending Survey;
08:30 GMT – United Kingdom. BoE FPC Meeting Minutes;
13:00 GMT - USA. House Price Index;
14:00 GMT - Eurozone. Consumer Confidence.

Wednesday, July 24
22:45 GMT – New Zealand. Trade Balance;
22:45 GMT - New Zealand. Import/Export;
05:00 GMT - Japan. Leading Indicators Index;
07:30 GMT - Germany. Markit Manufacturing Purchasing Managers Index (PMI);
08:00 GMT - Eurozone. Markit Composite Manufacturing Purchasing Managers Index (PMI);
08:00 GMT - Eurozone. Markit Manufacturing Purchasing Managers Index (PMI);
13:45 GMT - USA. Markit Composite Purchasing Managers Index (PMI);
13:45 GMT – USA. Markit Manufacturing Purchasing Managers Index (PMI);
14:00 GMT - USA. New Home Sales.

Thursday, July 25
23:50 GMT - Japan. Foreign Investments in Japanese Stocks;
23:50 GMT - Japan. Foreign Bonds Buying;
05:05 GMT - Australia. RBA Governor Lowe Speaks;
08:00 GMT - Germany. IFO Business Climate Index;
11:45 GMT - Eurozone. European Central Bank (ECB) Interest Rate Decision;
12:30 GMT - Eurozone. European Central Bank (ECB) Press Conference and Monetary Policy Statement;
12:30 GMT - USA. Initial Jobless Claims;
12:30 GMT - USA. Durable Goods Orders.

Friday, July 26
23:30 GMT - Japan. Tokyo Consumer Price Index (CPI);
12:30 GMT - USA. Personal Consumption Expenditure (PCE) Prices;
12:30 GMT - USA. GDP (Q2);
12:30 GMT - USA. GDP Price Index (Q2).

Author: Anthony Porter, IAFT Analyst