Thursday ended with the EUR/USD being high above of local resistance of 1.10. What's the target now?
Common currency rebounds from 21-month minimums
On Friday, the common currency is trying to revive following Thursday’s battering right after the ECB downgraded its surge estimates and failed to persuade financial markets with its initiative for stabilizing the EU economy.
Financial analysts told that notwithstanding the fact the EU’s major financial institution had attempted to get ‘ahead of the game’ with its announcement, but the ECB had only managed to draw attention to the lack of progress in the EU at addressing its structural and institutional flaws.
As a matter of fact, the common currency was worth $1.1206, adding 0.3% from the two-year minimum it reached after ECB Governor Mario Draghi’s press conference. Overnight, it had reached a minimum of $1.1175 that appears to be its lowest outcome versus the evergreen buck for two years.
The common currency also tumbled versus the UK pound notwithstanding a flurry of downbeat headlines around Brexit that generally tend to impact the UK currency.
Tracking the purchasing power of the US currency versus a number of its primary counterparts the USD index was worth 97.428, diving from an overnight peak of 97.595, that turned out to be its highest value since May 2017.
The ECB’s estimate validated market worries of a global economic deceleration, and they were further underpinned by data overnight disclosing a steep dive in China’s exports in January.
Financial markets will look to the monthly American payrolls report just to make sure that all three leading economic blocs aren’t struggling now. Moreover, market participants are also waiting for January data on industrial output from three of the biggest four Eurozone economies – Spain, Italy, and France, while Germany is going to uncover manufacturing orders data for the same month.
The EUR made a significant rise on the news of the stimulus expansion. Will it last long?
April seasonal patterns weren’t supposed to work, but somehow they did. Even a strong fundamental issue such as the global recession amid the coronavirus couldn’t overwhelm it. That’s why May seasonal patterns may work as well.
The US NFP will be published on August 7 at 15:30 MT time.
The market sentiment is indeed risk-on today. Stocks, riskier currencies and gold are rising amid the waning US dollar.
Follow the BOE monetary policy and rate statements on August 6 at 14:00 MT time…