EUR/USD: Today, ECB and US statistics on the menu

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The Euro/Dollar froze a few minutes before the ECB’s verdict, which is completing a new Governing Council meeting this Thursday. The bias remains bullish on the flagship currency pair, mainly due to the recently abandoned prospect of two federal rate cuts this year, one at the start of the school year and one at the end of the year, due to an encouraging price trajectory.

For the ECB today, a status quo on the rates themselves is acquired. But currency traders will be attentive to the slightest inflection in the language elements used by the Institution, both in the press release (2:15 p.m.) and during the press conference (2:45 p.m.).

Nomura analysts note that “much of the ECB’s rhetoric in Sintra focused on the strength of the eurozone’s labor market, the resilience of wage growth and the risks to service sector inflation. As Lane noted, central banks typically cut interest rates in response to a slowdown in the economy and a deterioration in the labor market; the eurozone faces neither, he noted, which is why ” [la BCE] must ensure that the risks of rising inflation are limited.”

Ahead of this monetary policy meeting, Konstantin VEIT, portfolio manager at PIMCO, expects a meeting “without major events”.

“The strength of the labour market allows the ECB to take time to gather new information. As a result, the ECB is in no rush to cut rates further; decisions will be taken on a meeting-by-meeting basis, and the evolution of data over the coming months will determine how quickly the ECB withdraws additional restrictive measures.”

Yesterday, currency traders took note of the consumer price data for June in the Eurozone, with no deviation from initial estimates, at +2.9% annualized excluding volatile items (food, energy, alcohol and tobacco). The agenda is getting denser across the Atlantic this Thursday with the weekly unemployment benefit registrations and the Philadelphia Fed manufacturing index at 2:30 p.m.

At midday on the foreign exchange market, the Euro was trading against $1,0930 approximately.

KEY GRAPHIC ELEMENTS

In a strong volatility in week 27, the Euro / Dollar currency pair regained the upper part of a bearish oblique line, constituting a short-term oxygen supply. The technical signals are contradictory in the immediate future and do not allow a serene position-taking. In any case, we are suspending our sell lines. We are currently witnessing a test of a resistance level located at $1.0885. Test about to be successful in the event of confirmation in weekly data.

MEDIUM TERM FORECAST

Considering the key graphic factors that we have mentioned, our opinion is neutral in the medium term on the Euro Dollar (EURUSD) parity.

We will maintain this neutral opinion as long as the Euro Dollar (EURUSD) parity rates are positioned between the support at 1.0758 USD and the resistance at 1.1012 USD.

DAILY DATA CHART