EUR/USD in calm waters after ECB minutes

EUR/USD has recorded slight losses on Thursday. Currently, EUR/USD is trading at 1.1804, down 0.30% on the day. On the fundamental front, the ECB released the minutes of its July policy meeting. In the US, economic numbers were weaker than expected. The Philly Fed Manufacturing Index slowed for a second successive month, falling from 24.1 to 17.2. This missed the estimate of 21.0 points. As well, unemployment claims rose above 1-million, with a release of 1.10 million. This was up from 963 thousand a week earlier.

ECB minutes signal alarm, but euro snoozes

The theme of the European Central Bank’s July meeting was “uncertainty”. The word appeared in the ECB minutes some 20 times, as the ECB remains very concerned about the outlook for growth and inflation in the eurozone. It remains unclear what will be the shape of the recovery. The markets would be delighted to see a V-shaped recovery, which signifies a sharp recovery. However, a lack of strong numbers could mean a U-shaped recovery, which would mean a slower, gradual recovery.

An unexpected headache for ECB policymakers is the surge of the euro, which is making a concerted move towards the lofty 1.20 level. This symbolic line has not been breached since May 2018. The high value of the euro means could mean lower inflation forecasts between 0.2 percent and 0.4 percent, which could force the ECB to respond with additional monetary stimulus before the end of the year.

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EUR/USD Technical

EUR/USD remains in a consolidation downward phase, after falling 0.77% on Wednesday. This was the sharpest one-day drop since early April.

  • 1.1916 is the next resistance line, followed by resistance at 1.1996. This line is above the 52-week high of 1.1965
  • 1.1794 is providing support. Below, there is support at 1.1751
  • EUR/USD continues to put pressure on the 10-day MA line. If the pair breaks below, it would be a bearish signal for EUR/USD

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.