CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

EURUSD returns to pre ECB levels ahead of US GDP

Article By: ,  Financial Analyst
July 26, 2019 7:46 AM

The EUR/USD came back to where it started before the European Central Bank’s policy announcement was made on Thursday. The single currency initially fell to a fresh 2019 low against the dollar in reaction to what looked like a dovish ECB Policy statement, before staging a sharp rally off the lows in response to President Mario Draghi’s comments at the press conference, where the ECB President appeared a lot less dovish than had been anticipated. He said that there were no discussions of cutting interest rates on Thursday, while any rate cut would come with mitigating measures. What’s more, there was a lack of unanimity in discussions, according to Draghi. But overall, the central bank did appear to prepare the markets for easing in September. So, fundamentally, the outlook remains bearish for the euro.

The EUR/USD will remain in focus later on with the release of US second quarter GDP. The world’s largest economy is forecast to grow at its slowest pace since 2016, ahead of an expected rate cut from the Federal Reserve next week. GDP is expected to print a meagre +1.8% q/q annualised (that is, quarterly change x4) versus +3.1% in Q1. This should move the markets, especially if the actual number shows a large deviation from the expected reading. So, hold off your weekend plans until after it is published.

Looking ahead to next week, there will be plenty of news that could impact the EUR/USD exchange rate. Among other things, we will have CPI and retail sales from the Eurozone, while US data includes the always-important non-farm payrolls report. For a more in-depth outlook, watch out for our week ahead report due later this afternoon.

Meanwhile from a purely technical point of view, the EUR/USD still looks heavy with price unable to break through the 1.1180-1.1210 resistance area yesterday. So a breakdown below 1.1100 towards the 127.2% Fibonacci extension at 1.1025 looks the more likely outcome at this stage than a short-covering rally towards the 200-day average at 1.1300. That is unless US GDP comes in well below expectations today or the Fed cuts by 50 basis points next week.

Source: Trading View and City Index

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024