Markets wait for Lagarde and the European Central Bank
During today's session, the market's attention will no doubt be focused on the words of European Central Bank President Christine Lagarde, following the ECB’s meeting.
In principle, the ECB is not expected to depart from the US Federal Reserve's script, so no changes are expected to be made to interest policy or its asset purchase program, but during the subsequent round Lagarde could leave between seeing future actions by the European Central Bank in terms of interest rates and inflation control.
Recently, we learned that the European Central Bank approved an historic change in its monetary policy strategy by raising its inflation tolerance level to 2% allowing this figure to be exceeded on a temporary basis. This is in a clear move to dispel doubts about its current monetary stimuli in the face of rising inflation produced by the economic recovery.
As we commented in our analysis of the Forex market two weeks ago, during the first half of the year EURUSD has lost 2.93% and for the moment this downtrend continues during this month of July with a decline of 0.51%, which has led EURUSD to lose several support levels including the important support levels of its average of 200 sessions in the red, its long-term uptrend line and its important support/resistance level in the orange band.
This bearish move has also caused a triple cross of bearish moving averages thus confirming the change from uptrend to bearish that could lead the price to seek its next level of support around the level of $1.17, despite the accumulated oversold in its stochastic indicator.
This oversold, in turn, may cause a upstic bounce in search of its current resistance levels in the coincident zone of its 18-session moving average and the orange fringe. If the pullback is finally confirmed the price could generate strong bearish momentum to its next support levels.
On the contrary, as long as EURUSD does not break its 200-session moving average higher and manages to maintain levels close to $1.19, we cannot expect a new upward momentum.
Source: Daily chart of EURUSD on Admirals MetaTrader 5 platform from March 24, 2020 to July 22, 2021. Held on July 22 at 11:00 CEST. Note: Past performance is not a reliable indicator of future results or future performance.
Evolution of the last 5 years:
- 2020 = +8.93%
- 2019 = -2.21%
- 2018 = -4.47%
- 2017 = +14.09%
- 2016 = -3.21%
With the Admirals Trade.MT5 account, you can trade Contracts for Differences (CFDs) on EURUSD and more than 3000 stocks! CFDs allow traders to try to profit from the bull and bear markets, as well as the use of leverage. Click on the following banner to open an account today:
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets trademark (hereinafter “Admiral Markets”) Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
- With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- The Analysis is prepared by an independent analyst, Javier Olivan (analyst), (hereinafter “Author”) based on their personal estimations.
- Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
- Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.