Eur/usd - page 162
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EURUSD fell during the course of the day on Friday session, testing the 1.28 level yet again. However, the 1.28 level is holding and did not break down below and as a result this pair should continue to go sideways.
Draghi Effect Subsides as Pressure Builds on ECB Chief
Mario Draghi’s stimulus pledge didn’t convince investors for long.
Exactly one month since the European Central Bank president told his global peers he was ready to act to avert deflation in the euro area, bets on consumer prices have collapsed. Even after surprise interest-rate cuts and an asset-purchase program, inflation expectations fell to an almost four-year low and business surveys this week may show a faltering economy.
Investors are speculating that Draghi, who speaks in Brussels today, is running out of options to revive the stalled recovery as confidence wanes and governments drag their feet on structural reforms. His appearance at the European Parliament could offer a glimpse into his thinking on current stimulus, and whether he’ll step up to large-scale quantitative easing.
“The recent drop in inflation expectations is a direct credibility challenge to the ECB which Draghi will need to address,” said Lena Komileva, chief economist at G Plus Economics Ltd. in London. “The markets are starting to price in a euro-area economic malaise and the stimulus the ECB has provided may prove inadequate.”
When Draghi spoke at a symposium for central bankers in Jackson Hole, Wyoming, on Aug. 22, he said inflation expectations were declining across “all horizons” and that policy makers “will use all available instruments” to safeguard price stability.
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EUR/USD Sep. 22 – Recovering from the blows ahead of Draghi’s testimony
EUR/USD is ticking higher in the wake of the new week, but it is only able to recover some of the losses seen late last week. The echoes of the FOMC meeting and the disappointing ECB TLTRO still weigh on the pair. The head of the ECB will testify later on and might provide some volatility. In the US, we also have some interesting data.
EUR / USD moved lower on Friday, but after finding support at 1.2825 recovered slightly.
In 1 hour and daily chart, one can see a positive divergence between our studies of momentum schedules, and price movement.
This may indicate a recovery.
The 14-day RSI left the oversold zone while the MACD crossed above its signal line.
However, the price structure remains at maximum and minimum below the lower moving averages (50 and 200 days).
The overall outlook remains negative.
Draghi Says ECB Actively Managing Balance Sheet
The European Central Bank will actively manage its balance sheet and is willing to implement more stimulus if required to stave off the threat of deflation in the euro area, ECB President Mario Draghi said.
“We are starting a transition from a monetary-policy framework predominately founded on passive provision of central-bank credit to a more active and controlled management of our balance sheet,” Draghi said in his quarterly testimony to European lawmakers in Brussels today.
The ECB president’s comments come after he signaled this month that he intends to expand the institution’s balance sheet by as much as 1 trillion euros ($1.28 trillion) with stimulus measures such as targeted longer-term loans for banks and an asset-purchase program. Officials are unanimous about embarking on further action if needed to fight the threat of falling prices in the 18-nation currency bloc, he said.
“The Governing Council remains fully determined to counter risks to the medium-term outlook for inflation,” Draghi said. “Therefore we stand ready to use additional unconventional instruments within our mandate, and alter the size and/or the composition of our unconventional interventions should it become necessary to further address risks of a too prolonged period of too low inflation.”
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Bundesbank: One-off Factors Boosted July Industrial Production
Bundesbank said German industrial production in July was largely influenced by the timing of school holidays.
Industrial output grew 1.9 percent in July, the most since March 2012. School holidays were concentrated in August this year, the bank said in its monthly report on Monday.
So the bank cautioned that a counter movement to July data is to be expected in August.
However, it said positive business climate mainly by the fact that the labor market that is still in a good condition, and consumers that have not adjusted their income expectations and consumption intentions despite a cloudier economic outlook, help to dispel fears of an abrupt end of the economic upward movement.
French Business Confidence 96 vs. 96 forecast
French business confidence rose in the last quarter, official data showed on Tuesday.
In a report, INSEE said that French Business Confidence rose to an annual rate of 96, from 96 in the preceding quarter.
Analysts had expected French Business Confidence to rise 96 in the last quarter.
EURUSD initially fell during the course of yesterday session, but bounced just above the 1.28 level. The pair is going to consolidate within the 100 pips consolidation area from 1.28 to 1.29 level.
During the European session today, the dollar negotiates low against almost all G10 peers. Was higher against the GBP, stable only for the AUD.
The EUR / USD rose while the value of PMI is presented below the previous level (52.3 to 52.5), remained, however, above the neutral level of 50.0 for the 15th consecutive month.
We are still in range and the bearish trend still stands price will be facing 1.2800 the strong support I don't think the price will be able to break it.