EUR / USD
The EUR / USD PAIR extended its intraday retracement from close to weekly highs, reaching below 1.1700 after the latest ECB monetary policy update.
The pair started to correct from an important area near $1,1745-1,1750 per euro, and lost more profits after European Central Bank President Mario Draghi confirmed the bank’s commitment to keep interest rates unchanged during the summer of 2019.
At the post-ECB press conference, Draghi noted that uncertainty about inflation expectations was easing and that core inflation would pick up towards the end of the year. Draghi’s optimistic comments on inflation expectations raised European government bond yields but gave no support for the common currency.
Meanwhile, the US dollar’s rebound was supported by rising US Treasury yields, and despite disappointing US macro data, led to further downward pressure and pulled the pair nearly weekly support, close to the $1.1660 area.
Technically, the sell-off is likely to continue pulling the pair back at $1,1600 per euro, and could extend to $1,1575 and towards $1,1535 and a major psychological mark at $1,1500. On the other hand, it appears that any positive momentum will face the resistance near the level of 1,1700 followed closely by the area of 1,1720-1,1725 and the important barrier at $1,1745-1,1750, which if cleared will negate any bearish trend in the short term.
GBP / USD
The GBP / USD pair is trading around $1,3130 per pound, with a low throughout the day. This comes with as negotiator of the European Union rejected a major part of the British trade proposal, complicating the Brexit negotiations. Earlier, the pair fell because of the USD’s strength.
Looking at the charts, the pair has rebounded to an important resistance level characterized by a short term bearish trend on the daily chart. GBP/USD is now approaching the area of $1,3235, setting the way to an extension of positive momentum. Along this barrier, the pair is likely to exceed the 1.3300 level and aims to test a major barrier close to the 1,3360-1,3365 area.
The reversal from the current resistance zone seems to find immediate support near the $1.3160 level, which is likely to break the decline and pull the pair back towards retesting the 1.3100 level.
Basic Overview
The continuation of the dollar’s trend in GBP / USD sales helped the latest recovery momentum from the lowest price since the beginning of last Thursday. The pound was supported by better-than-expected UK Central Bank sales which showed a strong spending trend for the second straight month in July. Positive trade-related headlines that emerged from a crucial meeting between US President Donald Trump and European Commission President Jean-Claude Juncker were also in favor of the GBP.
In the absence of any impressive economic data from the UK, the ECB-led volatility in the market may affect price action ahead of US durable goods orders data. However, the main focus will be on the release of US GDP growth data for the second quarter, which will provide significant momentum for importance ahead of the ECB’s very important monetary policy decision next week.
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