The Euro may rise after the signals from the ECB
Yesterday, the single currency received an unexpected signal from the ECB: the Central Bank plans to announce the dates for completion of the program of quantitative easing already at the next meeting, which will take place next week. This information was confirmed today by a senior economist of the Central Bank Peter Praet. In response, EURUSD pulled to 2-week highs in the area 1.1775, leaving behind 20-day moving average, which recently restrained the impulses of the bulls.
Euro and already felt bad due to fading bullish momentum of the dollar and the decline in political risk in Europe, where Italy got a new government. However, from this front for the single currency there are still risks, since the policies of the populist government, providing further inflating the budget deficit of the country will merely exacerbate the differences with the European Union.
In the meantime, this factor takes a back seat – investors has shifted to the ECB. It seems the regulator has decided to prepare the ground for the exit incentive program, which, according to the current plan, will be valid until at least September. The market now will lay the price in a more aggressive tone regulator at the upcoming meeting. However, here caution is required, as Draghi is unlikely to dare to clearly hawkish rhetoric, given the state of health of the regional economy, which has deteriorated markedly since the beginning of this year.
As for the technical picture on EURUSD after the recent spurt, the pressure on the Euro continued to weaken. Quotations grow for the fifth of the last six trading days that could indicate the presence of signs of fracture of the bullish trend on USD, which is “lame” due to concerns related to trade wars between the US and the rest of the world. The combination of protectionism trump and a potential hawkish signals from the ECB is able to set a strong positive tone of the single currency, but to draw conclusions and the integrity of the trend better following the meeting, the European Central Bank.
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