We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
Oil - US Crude
More View more
Real Time News
  • #Forex Forecast via @DailyFX: US Dollar Technical Outlook on $DXY, $AUDUSD, $USDCAD, $USDJPY & $EURUSD Full Analysis ⬇️ https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2019/11/17/usd-price-us-dollar-chart-forecast-dxy-audusd-usdcad-usdjpy-eurusd.html
  • Further escalation in Hong Kong will likely bode poorly for risk appetite https://t.co/0NjUd3ahBu
  • How should you trade around event risks and what steps can you take to improve your trading psychology? Find out from @JoelKruger, a trading consultant and mentor. Only on Global Markets Decoded. Missed the episode? Read up here:https://t.co/JWIGJk4vKa https://t.co/WB39x4GP99
  • Poll - Does your personality match your #tradingstyle? Vote and find out from @WVenketas here: https://t.co/vREsUIWSJd https://t.co/Ft0ExAmMpq
  • #Dow Jones hits record high, however, central bank liquidity prompts volatility implosion. #FTSE 100 among underperformers with focus remaining on politics. Get your #equities market update from @JMcQueenFX here: https://t.co/EOFleGSeBp https://t.co/ecAyfSUeAM
  • RT @C_Barraud: 🇪🇺 #ECB’s Muller Says More Assets Could Join Stimulus List in Slump - Bloomberg https://t.co/roGEgu0VTQ
  • With increasing volatility in weather patterns, how might storms, hurricanes and floods rattle the supply chain for petroleum-based products and impact crude oil prices? Find out from @JStanleyFX here:https://t.co/O4dgBl47fq https://t.co/OQYqZAYt9S
  • Currency Strategist,@PaulRobinsonFX is a Swing trader. What is your #tradingstyle? Take the quiz and let us know: https://t.co/LPBOcS0Vtd https://t.co/WzRYeqRhUL
  • Despite what your #tradingstyle is, you should be keeping a trading journal. How can you start keeping a trading journal? Find out: https://t.co/0akgWbyJEw https://t.co/4ehMlN4zv1
  • The Euro’s struggle to move higher against a range of currencies continues and without further support this is likely to continue into the year-end. Get your $EURUSD market update from @nickcawley1 here: https://t.co/myZ7R0eGUb https://t.co/12WJd53Cx4
Why the Euro, Dollar Rally After the ECB? Leaving EURUSD at Support

Why the Euro, Dollar Rally After the ECB? Leaving EURUSD at Support

2019-07-25 23:30:00
Daniel Dubrovsky, Analyst

Asia Pacific Market Open Talking Points

  • Euro recovered despite dovish ECB rate decision as Draghi calmed dovish bets
  • US Dollar saw demand as bond yield gains spread into North America on data
  • EUR/USD was unable to clear well-defined support, is it about to bounce again?

Not sure where the US Dollar is heading next? We recently released the third quarter US Dollar fundamental and technical forecast!

The Euro was at one point on its way to close at its lowest point against the US Dollar since 2017 as the ECB rate decision seemed to prepare markets for further stimulus later this year. Not only did policymakers see rates at present or lower levels for “as long as needed”, but also the central bank showed that it is looking to examine options for "potential new asset buying", also known as quantitative easing.

Looking at overnight index swaps, chances of a 10 basis point rate cut now stand at about an 85% probability for September, with further easing at even odds by year-end. Afterwards, ECB’s President Mario Draghi also had plenty of gloomy things to say about the economic outlook such as it is “getting worse and worse”, highlighting particular concerns over manufacturing.

Yet, accompanying his speech was not only a reversal in EUR/USD, but also in Eurozone front-end government bond yields. This signaled that dovish bets were underwhelmed and were contained by Mr Draghi. He did note that there were different nuances of views on parts of a package as risks of a recession are “pretty low”. As such, this means we will have to wait until September for further specifics and data.

There was also a rally in USD eyeing an equally-weighted index against its top 4 liquid major counterparts. This occurred as local front-end government bond yields climbed as the S&P 500 ended the day 0.53% to the downside. Better-than-expected US durable goods orders, coupled with ECB disappointment, likely fueled a comeback in the Greenback as anti-fiat gold prices weakened.

Rising Bond Yields Pressured Equities After ECB, US Durable Goods Orders

Rising Bond Yields Pressured Equities After ECB, US Durable Goods Orders

Friday’s Asia Pacific Trading Session

While Wall Street underperformed, S&P 500 futures are little changed heading into Asia Pacific trading hours. Some pessimism in equities from earlier might have been cooled as the US House of Representatives passed a debt-limit and budget deal, sending it to the Senate. A relatively quiet economic docket ahead places the focus for currencies on risk trends.

EUR/USD Technical Analysis

The EUR/USD wasn’t able to clear critical support which is a range between 1.1110 and 1.1132. This area is the lows achieved back in May and June of 2017. In the past, failure to breach support resulted in a temporary rebound, but the dominant downtrend held. Keep in mind that past performance is not indicative of future results. Near-term resistance appears to be at 1.1201.

EUR/USD Daily Chart

Why the Euro, Dollar Rally After the ECB? Leaving EURUSD at Support

Charts Created in TradingView

FX Trading Resources

--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.


News & Analysis at your fingertips.