ECB pours cold water on Euro

18 August, 2017

ECB pours cold water on Euro

The Euro has been swinging heavily over the last few days as the markets continue to go through some unpleasant motions. This has been brought on by some schizophrenic USD movements as of late, but also by the EU itself, which had its monthly ECB minutes released today. Overall, it was mostly positive for the Euro-zone with policy makers agreeing that it seemed that the Euro-zone was making progress returning to economic stability - despite the Brexit debacle across the channel. In addition to this though policy makers were concerned about the EURUSD which had obviously got stronger on better fundamentals, but felt it might be overstretched at present compared to the economic data at hand. The market was of course quick to react to such statements, and the EURUSD had a sharp drop, which was followed up by strong US economic data around the labour rates later in the afternoon.

The question remains then where should the EURUSD be placed at present on the charts. Right now we've been seeing large wicks appearing on the charts that are symptoms of the bears taking a very solid swipe. However, so far, traders have managed to keep the price above support at 1.1719, though there is a serious question around how much more pressure it can take. The 20 day moving average has also jumped up the charts and was acting as dynamic resistance today and is starting to turn lower, it could be the case we see further downward pressure leading into tomorrow. In the event the bears do take control and head lower then support at 1.1621 is likely to be the main target for traders. If the bulls can however take control and force it upwards then I would expect to see resistance retested at 1.1800 and finally another crack at resistance at 1.1915. However, despite this all be careful of the current state as the EURUSD has been struggling under all the pressure at present.

The Australian economy was boosted overnight by labour market statistics being released showcasing the economy is booming. The employment sector expanded by 27.9K (20k exp), while the participation rate lifted to 65.1% (65.0 prev). These are good figures from the Australian economy which has been struggling since the commodities sector took after the global financial crisis. It does however boost the chance going forward that the RBA might be forced to act in the long run and boost interest rates again. Markets will certainly be keen to hear the coming statements from the RBA in the next few months as a booming economy could put pressure on the RBA to act.

On the charts the AUDUSD has certainly been a little bearish as of late, but the strong jump the other day and the labour market stats have helped immensely. Today's USD figures also put pressure on the AUD, but it has remained above support at 0.7900 and this level is looking quite strong. If the market looks to extend further I would expect a rise up to the 0.8000 level and with more positive economic data a push through. 

Source link  
Yen bulls jump on weak FED inflation

FOMC meeting minutes are always greeted warmly by the markets, as a glimpse of the potential future direction of the FED going forward...

S&P 500 hits record high

The US equity markets jumped sharply today on the back of positive economic data as US home sales m/m came in strongly at 5.48M (5.40M exp)...

European currencies dip on German politics

The Euro had a pause for concern in the evening trading session as the coalition talks in Germany fell apart leading to a political crisis in Germany.

Central bankers, Euro and UK GDP

Asian shares were depressed on Monday morning, as investors remained guarded amid lingering concerns over U.S. tax reforms. The caution from Asia...

US tax bill send equities soaring

The Tax bill has been talked about for some time, and today was the day for it. Obviously, it cleared the US house easily enough and is now...

Equity markets looking unhinged

It should be all good news for global equity markets at present as the global recovery continues to tick along nicely. So far profits are up and the market...

Steep equity correction is underway

2017 has seen many hedge fund and portfolio managers send warning signals that an equity market correction is overdue. Overstretched valuations...

RBNZ set for change on new mandate

The New Zealand government continues to be in the eye of traders as the current changes to the Reserve Bank of New Zealand look to be...

Brent touches a new 2-year high

Oil prices continued to march higher on both sides of the Atlantic early Monday. In the early trading hours, Brent reached a high of $62.44...