The governor of the European Central Bank (ECB), Mario Draghi, has not allowed the euro to recover last Thursday, as it announced that the institution was ready to continue its progressive strategy of monetary tightening.
In effect, the net purchases under the asset-purchase program of the ECB (in the APP or Asset Purchase Programme, which currently reach 15 billion euros per month until the end of December 2018, should cease at this time there if the economic data show that the inflation outlook in the medium term following the forecasts and the objectives of the ECB.
Currently, “the available data, although slightly behind expectations remain broadly consistent with a continuation of the general growth of the economy of the euro area and a gradual rise in inflationary pressures,” says Mario Draghi at its press conference.
For the european institution, “risks to the growth outlook of the euro zone may still be considered to be broadly balanced,” but for investors it is a different story.
The markets don’t seem to really be convinced, particularly with recent data showing a drop in activity down to a record low in 25 months and the many tensions between the European Union and its members, notably Italy and the United Kingdom.
What to expect from the EUR/USD this week?
Then that 1 month ago the EUR/USD pair formed a top at 1,1816 $ – its highest level since June 2018, it has since fallen sharply, reaching its lowest level in 1,1335 $ last Friday – a level previously reached in the sharp drop in the months of August 2018.
After having accelerated its plunge on Friday, the pair EUR/USD has finally ended in the green, erasing the losses of the session of the day and the trading day previous.
As the market neared its lowest level since last August, many investors techniques are entered on the Friday market around the important level of 1,1335 $, which has led to this rebound. From a fundamental point of view, a report showed that u.s. inflation would be lower than what the Fed anticipates, which has weighed on the U.s. Dollar and supported the EUR/USD.
The likelihood that the courses can “breathe” in the next few days was increased Friday with the rebound, which could lead to many trading opportunities.
In this context, the course could reach the top of the channel in the direction of the first resistances to 1,1471 $ and 1,1537 $. Conversely, if the courses continued to fall, they were heading in the direction of the next two racks to 1,1337 $ and 1,1284 $, which would then speed up their fall.
More statistics to follow this week
While traders wonder if the courts will continue to decline or if the pair will be able to revive his tendency, several indicators should lead to some volatility on the markets and influence the course in one direction or the other :
- Tuesday, October 30 – 11 : 00 am: Euro Area GDP – 3rd quarter
- Wednesday, October 31st – 11 : 00 am: Inflation in the Euro Area – October
- Friday 2 November – 14h30 : Report of the employment in the United States (NFP, unemployment rate, and the evolution of the average wage, etc)
At the geopolitical level, traders will be closely monitoring any progress regarding an agreement on the Brexit, or the new budget Italian, as well as the situation in Saudi Arabia, the commercial relations between the United States and China and the results of the firms because these events are currently on sentiment, lower global equity markets, and strongly influence various currencies.
