EUR/USD bears find new fuel thanks to the ECB – 1.1100 in focus

By Admiral Markets

Source: Economic Events July 26, 2019 – Admiral Markets’ Forex Calendar

After the ECB rate decision yesterday, and the Fed rate decision coming up next Wednesday, we want to focus today on the EUR/USD.

The currency pair saw a drop over the last few days, and went for a test of its current yearly lows after the ECB statement was released.

While the ECB kept interest rates unchanged, it adjusted its forward guidance in a way which allows rate cuts, but also rate tiering (to relieve pressure on European banks resulting out of a collapse in yields) and QE in the near-term.

In addition to that, the mentioning of inflationary pressures which have been persistently below levels that are in line with the central bank’s aim (note: 2%), and as long as that’s the case, the ECB will adjust all of its instruments as appropriate.

With that said, further monetary stimulus should be expected, coming probably in September, with the European Central Bank lowering interest rates into negative territory. So, the already expected rate cut from the Fed next Wednesday will most likely not trigger a sharp reversal in the EUR/USD.

This is especially true if today’s US GDP Growth Rate data comes in better than the expected 1.8%. After the solid Retail Sales data on July 16 (which saw a print of 0.4% against the expected 0.1%), and knowing that Retail Sales account for around 30% of the GDP, a better-than-expected US GDP print is a serious option and could trigger some USD strength if it results in an “out-pricing” of a fourth rate cut in 2019 in the Fed Watch Tool.

Technically, we carefully watch the region around 1.1180/1200 as a potential Short-trigger, against which a sustainable break below 1.1100 could be anticipated. The outlook on H4 stays clearly bearish as long as we trade below 1.1280/1300:

Source: Admiral Markets MT5 with MT5-SE Add-on EUR/USD 4-hour chart (between June 11, 2018, to July 25, 2019). Accessed: July 25, 2019, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

Source: Admiral Markets MT5 with MT5-SE Add-on EUR/USD Daily chart (between April 20, 2018, to July 19, 2019). Accessed: July 19, 2019, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2014, the value of the EUR/USD fell by 11.9%, in 2015, it fell by 10.2%, in 2016, it fell by 3.2%, in 2017, it increased by 13.92%, 2018, it fell by 4.4%, meaning that after five years, it was down by 16.5%.

Investing in Forex with Admiral Markets

Admiral Markets offers professional traders the ability to trade with a custom, upgraded version of MetaTrader 5, allowing you to experience trading at a significantly higher, more rewarding level. Experience benefits such as the addition of the Market Heat Map, so you can compare various currency pairs to see which ones might be lucrative investments, access real-time trading data, and so much more. Click the banner below to start your FREE download of MT5 Supreme Edition!

Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter “Analysis”) published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:

1. This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
2. Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
3. Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter “Author”) based on the Author’s personal estimations.
4. To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
5. Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.
6. The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
7. Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
8. The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.
9. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the risks.

By Admiral Markets