EUR/USD – Euro Down Slightly Ahead of ECB announcement

EUR/USD is slightly lower in the Thursday session. Currently, the pair is trading at 1.1712, down 0.13% on the day. On the release front, German GfK Consumer Climate edged lower to 10.6, just shy of the estimate of 10.7 points. Later in the day, the ECB sets its minimum bid rate. In the U.S, the focus is on durable goods orders. Core durable goods orders is expected to climb to 0.5% and the durable goods orders is forecast to jump to 3.0%. Both indicators recorded declines in the previous release. On Friday, the U.S releases Advance GDP and UoM Consumer Sentiment.

After weeks of a bruising trade war, the EU and U.S have agreed to take steps to reduce tensions. On Wednesday, EU Commission President Jean-Claude Juckner met with President Trump, and the talks appear to have been more successful than expected. The parties agreed to hold off on any further tariffs while talks are ongoing. This is a major concession from Trump, who had threatened to impose tariffs on European car imports. U.S tariffs on European aluminum and steel will remain in place, but Juckner pointed out that the U.S has agreed to reassess these measures. The surprise agreement eases fears of a full-blown transatlantic trade war. Will the goodwill displayed by Trump extend into some kind of agreement with China as well?

All eyes are on the ECB, which will set interest rates later on Thursday. The markets are not expecting anything dramatic from policymakers, with rates expected to remain at 0.00%. In June, the ECB decided to end its massive bond-purchase scheme by the end of the year, which has amounted to some 2.6 trillion euros. However, the ECB is playing it very cautious regarding any interest rate hikes, with the ECB saying it would maintain record-low rates “through the summer” of 2019. Trade tensions between the EU and U.S have dampened growth forecasts for the eurozone, although the Juckner-Trump meeting has considerably improved market sentiment. The ECB could tweak its guidance, but is unlikely to make any changes to current monetary policy.

  Risk on as US and Europe avert trade battle

  U.S-E.U calls a ceasefire in the trade war

EUR/USD Fundamentals

Thursday (July 26)

• 2:00 German GfK Consumer Climate. Estimate 10.7. Actual 10.6
• 3:00 Spanish Unemployment Rate. Estimate 15.8%. Actual 15.3%
• 7:45 ECB Main Refinancing Rate. Estimate 0.00%
• 8:30 ECB Press Conference
• 8:30 US Core Durable Goods Orders. Estimate 0.5%
• 8:30 US Durable Goods Orders. Estimate 3.0%
• 8:30 US Unemployment Claims. Estimate 215K
• 8:30 US Goods Trade Balance. Estimate -67.0B
• 8:30 US Preliminary Wholesale Inventories.  Estimate 0.5%
• 10:30 US Natural Gas Storage. Estimate 39B

Friday (July 27)

• 8:30 US Advance GDP. Estimate 4.1%
• 10:00 US Revised UoM Consumer Sentiment. Estimate 97.1

*All release times are DST

*Key events are in bold

EUR/USD for Thursday, July 26, 2018

EUR/USD for July 26 at 5:30 DST

Open: 1.1727 High: 1.1744 Low: 1.1705 Close: 1.1712

EUR/USD Technical

EUR/USD was flat in the Asian session and has edged lower in European trade

• 1.1637 is providing support
• 1.1728 is the next line of resistance

Further levels in both directions:

• Below: 1.1637, 1.1553, 1.1434 and 1.1312
• Above: 1.1728, 1829 and 1.1910
• Current range: 1.1637 to 1.1728

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