EURUSD under pressure after ECB comments
Gary Christie October 29, 2020 8:24 PM
ECB kept its main benchmark rate unchanged at -0.50%. EURUSD Chart update.
The US Dollar was bullish against all of its major pairs on Thursday. On the US economic data front, Initial Jobless Claims fell to 751K for the week ending October 24th (770K expected), from a revised 791K in the week before. Continuing Claims declined to 7,756K for the week ending October 17th (7,775K expected), from a revised 8,465K in the prior week. GDP surged to +33.1% on quarter for the third quarter advanced reading (+32.0% expected), from -31.4% in the second quarter third reading, marking an all-time high. Finally, Pending Home Sales slipped 2.2% on month in September (+2.9% expected), compared to +8.8% in August.
On Friday, Personal Income for September is expected to rise 0.4% on month, compared to -2.7% in August. Personal Spending for September is expected to increase 1.0% on month, in line with August. Market News International's Chicago Business Barometer for October is expected to decrease to 58.0 on month, from 62.4 in September. Finally, the University of Michigan's Consumer Sentiment Index for the October final reading is expected to remain at 81.2 on month, in line with the October preliminary reading.
The Euro was bearish against all of its major pairs. In Europe, ECB kept its main benchmark rate unchanged at -0.50%. The institution said that "the Governing Council will recalibrate in December its instruments, as appropriate, to respond to the unfolding situation and to ensure that financing conditions remain favorable to support the economic recovery and counteract the negative impact of the pandemic on the projected inflation path." The German Federal Statistical Office has posted October jobless rate at 6.2% (vs 6.3% expected). The Bank of England has released the number of mortgage approvals for September at 91,500 (vs 76,100 expected). Separately, German CPI was up 0.1% in October after a 0.2% slid a month earlier. It was expected flat. The European Commission has reported the Euro zone's October Economic Confidence Index at 90.9 (vs 89.6 expected) and Consumer Confidence at -15.5, vs -13.9 in September.
The Australian dollar was bullish against most of its major pairs with the exception of the CAD and USD.
Looking at the major pair movers, it's no surprise the EUR/USD is under pressure in Thursday's trading. The pair is down over 71 pips after comments from the ECB above. Even with today's decline, price action remains in a consolidation between 1.202 resistance and 1.1605 support. Breakouts are where large trends take shape. The bias remains to the upside due to the prior bullish trend however a breakdown is possible. It is best to sit on the sidelines and avoid the chop until a breakout is confirmed. A breakout to the upside would yield a target of 1.2265 resistance while a downside breakout would find support at the 1.144 area.
Source: GAIN Capital, TradingView
Disclaimer: The information on this web site 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. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.