- SWFX market sentiment is 51% bullish
- Pending commands in the 100-pip range 57% short
- Pair opened Thursday's session at the 1.1013 level
- Aggregate daily technical indicators bet EUR/USD will depreciate
- Economic events to watch over the next 24 hours: French Flash PMIs (July); German Flash PMIs (July); EU Flash PMIs (July); US PMI Manufacturing (July);
As markets expected, the European Central Bank (ECB) kept its key interest rates on hold on Thursday, but signaled that it is prepared to add more monetary stimulus later in the year. The main refinancing rate was left at 0%, whereas the ECB interest rates on the deposit facility and the marginal lending facility remained unchanged at -0.40% and 0.25%, respectively. The central bank slashed its deposit rate deeper into negative territory in March. In a news conference, Mr. Draghi said the Brexit vote had added to "headwinds" for the Euro zone economy, that include broader geopolitical uncertainty. Mario Draghi, President of the European Central Bank, also confirmed that the monthly asset purchases of 80 billion euros may run beyond the current deadline of March 2017, if necessary. Furthermore, the central bank's President highlighted that the governing council may provide more stimulus at its next meeting in September, as new post-Brexit forecasts for economic growth and inflation will be available by that time. Meanwhile, analysts polled by Reuters slashed their growth forecast for the Euro zone to 1.3% from 1.6%, but left inflation projections unchanged at 1.3%
Euro zone and European Union consumer confidence fell markedly in July, the European Commission reported releasing its monthly indicator, in a new sign of weaker morale after the 23 June British vote to leave the European Union. The European Commission's flash estimate showed that the mood of shoppers in the currency bloc decreased by 0.7 points to minus 7.9 in July from an upwardly revised minus 7.2 in June. That was lower than the minus 7.3 points estimated by markets. The marked drop in July follows a slight fall in June and two consecutive rises in April and May. Meanwhile, the figures for the European Union as a whole showed a much worse drop of 1.8 points to -7.6, a level not seen in two years. The indicator for the bloc as a whole is now below the Euro zone indicator for the first time in years. A lot of economists believe that if this trend continues, the decline in confidence threatens to weaken the bloc's already modest economic recovery. Propelled by a gradual decline in unemployment and lower energy prices, growth has been driven by rising consumer spending over recent quarters, while demand for exports has been slowing.
Upcoming fundamentals: EU and US PMIs
On Friday morning, the EU countries publish their July PMI Manufacturing and PMI Services indices, which become the PMI Composite indices. First of all will be the French, who release their data at 7:00 GMT. Afterwards, the Germans are set to publish their data at 7:30 GMT. At the end of the data releases, the EU statisticians will combine the data and release the same data indices for the whole of EU. In addition, Markit statisticians on the other side of the Atlantic Ocean, namely the United States, will finalize and publish the US PMI Manufacturing index for July at 13:45 GMT.
EUR/USD slightly surges on Thursday
Daily chart: The Euro was volatile between the levels of 1.1060 and 1.0980 during Thursday's session against the US Dollar. Most of the volatility was cause by the ECB rate decision and the afterwards press conference. However, it did not change the fact that by the end of the day's trading session the currency exchange rate had moved from 1.1013 to 1.1025, which was a small surge. The surge occurred due to the pair rebounding against the lower Bollinger band in the morning of Thursday. The rate continues to slowly increase on Friday morning, as it had reached 1.1030 level by 5:00 GMT.Daily chart
Hourly chart: The hourly chart of the EUR/USD pair shows an almost flat situation, as the currency exchange rate just kept bouncing between the Bollinger bands with a volatility of around 30 pips in the last 24 hours. However, there is one exception, from 12:00 to 15:00 GMT the pair moved first up, declined and then it moved back to the previous level. The reason for this was the ECB rate announcement and the sub sequential Mario Draghi's press conference.
Hourly chart
SWFX sentiment remains bullish on Friday
OANDA trader bearish sentiment has increased compared to Friday's 51.27%, as, at the moment, 53.85% of OANDA open positions are short. In the meantime, SAXO Bank clients have also increased their bearish stance, as their open short positions are now at 53.52% compared to 52.76% of last trading session.