Article by AlgosysFx Forex Trading Solutions
In yesterday’s European trading session, the Euro lost against the US dollar on fears that the European Central Bank could disappoint at tomorrow’s meeting, and would not disclose much details about its possible intervention in the markets until the German Constitutional Court makes a judgement on September 12 over the legality of the European Stability Mechanism, the Euro Zone’s bailout fund. This led to the incline of the Greenback despite economic data showing a contraction of the US’ manufacturing activity in August. As the ECB meeting draws closer, the shared currency is projected to decline versus the Buck in today’s European trading exchanges.
In a closed-door session at the European Parliament in Brussels, ECB President Mario Draghi told lawmakers that the bank has lost control of borrowing costs in the Euro Zone. He also said that the central bank’s primary mandate requires it to intervene in bond markets to take back control of interest rates and make certain the Euro’s survival. Everyone seemed to have been fixated on the ECB’s bond-buying plan, but the risks of disappointment are seen to add pressure to the single currency.
Today, the Euro Zone’s Retail Sales figure in July is projected to drop by 0.2 percent, and activity in the services sector is likely to be confirmed at 47.5 points, which are expected to push the Euro lower than its peers. As tomorrow’s meeting would likely disappoint while the judgement of the German court is still pending, the EUR/USD pair is set to decline in today’s European exchanges, favoring a short position in today’s European exchanges.
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