DailyFX Table

Ticker

Last

High

Low

Daily Change ($)

Daily Range ($)

EUR/USD

1.1408

1.1410

1.1330

56

80

EUR/USD appears to be on its way to test the 2017-high (1.1446) as the European Central Bank (ECB) shows a greater willingness to move away from its easing cycle.

President Mario Draghi and Co. appear to be embracing a less-dovish outlook for monetary policy as officials note the positive developments coming out of the euro-area ‘had to be reflected in the Governing Council’s communication by dropping the reference to the expectation of further rate cuts in its forward guidance on policy rates.’ As the ECB finally puts a floor on interest rates, it seems as though the central bank will continue to revisit ‘the easing bias with respect to the APP purchases’ as the non-standard measure is set to expire in December. As a result, the material shift in EUR/USD behavior may gather pace in the second-half of the year should the Governing Council show a greater willingness to gradually wind down its asset-purchase program over the coming months.

At the same time, Fed Fund Futures are now pricing a less than 60% probability for a December rate-hike as the ADP Employment survey falls short of market expectations, with private-sector jobs increasing 158K in June. In turn, market participants may put increased emphasis on the Non-Farm Payrolls (NFP) report as job and wage growth are projected to pick up going into the second-half of the year, but another batch of mixed data prints may generate a bearish reaction in the U.S. dollar especially as the Federal Open Market Committee (FOMC) remains in no rush to unload the balance sheet.

EUR/USD Daily

EUR/USD Daily Chart

  • Broader outlook for EUR/USD remains constructive as price & the Relative Strength Index (RSI) retain the upward trends from late-2016, with the pair at risk for a larger advance as a near-term bull flag formation appears to be panning out; will keep a close eye on the recent series of higher highs & lows as the former-resistance zone around 1.1290 (38.2% expansion) appears to be offering support.
  • A break of the June-high (1.1446) may spur a more meaningful run at the 1.1480 (78.6% expansion) hurdle, with the next topside area of interest coming in around 1.1580 (100% expansion).
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