The first part of the week was marked correction of recent declines that took place last week. On Tuesday, there was a failed attack on the resistance level of 1.1368. Demand reached only to the level of 1.1333 and then the supply has led to declines. The weakness in demand we have seen also during Wednesday's session, when the EUR / USD retreated despite weaker economic data from the US (non-farm employment change in the ADP 190K, with market consensus at 201K).
On the demand side weakness may be affected by several factors. First of all, remember that on Thursday Mario Draghi will take part in a press conference after the ECB meeting, which will discuss the current economic situation and present a macroeconomic projections. It is worth mentioning that the recent problems of the Chinese economy adversely impact the entire EU economy. President of the ECB will signal whether any additional action (to increase the current QE), if a stronger slowdown in China?
To summarize the above sentence, it is worth remembering that a weak recovery in the EU is far from perfect, the strong slump in China could squash them.
Another reason for limiting the growth expectations of investors who are counting on heavily hawks records at the next Fed meeting, which will take place on 17 September. In this case, we can assume that a rate hike should occur within the next 6 months.
On Thursday, in addition to an ECB President Mario Draghi, we will see a variety of data from Europe and the US.
The outlook for EUR / USD:
On Thursday, we should see the clearance of lateral trend, what is discussed currency pair. Pro downward signal may be weak data from Europe and a press conference by Mario Draghi. If you also get better data from the US, the supply should not have a problem with breaking the next support levels at levels 1.1179 (76.4% Fibonacci retracement increases of 1,1016-1,1712) and 1.1155 (minimum of 28 August). Subsequently, the next props should be 1,1113-28 area (peaks in late July). In the long-term, natural target remains 1.1016 level.
In an alternative version, the currency pair will be supported by the data and the comments of the ECB President will support common currency, which will lead to strong growth. In this case, you must reckon with increases in the vicinity of the last peak at 1.1333 and 1.1368. Previously, however, demand will also have to deal with resistance at 1,1277-86.
In my opinion, a variant with a predominance of decline appears to be a variant more likely.
On the demand side weakness may be affected by several factors. First of all, remember that on Thursday Mario Draghi will take part in a press conference after the ECB meeting, which will discuss the current economic situation and present a macroeconomic projections. It is worth mentioning that the recent problems of the Chinese economy adversely impact the entire EU economy. President of the ECB will signal whether any additional action (to increase the current QE), if a stronger slowdown in China?
To summarize the above sentence, it is worth remembering that a weak recovery in the EU is far from perfect, the strong slump in China could squash them.
Another reason for limiting the growth expectations of investors who are counting on heavily hawks records at the next Fed meeting, which will take place on 17 September. In this case, we can assume that a rate hike should occur within the next 6 months.
On Thursday, in addition to an ECB President Mario Draghi, we will see a variety of data from Europe and the US.
The outlook for EUR / USD:
On Thursday, we should see the clearance of lateral trend, what is discussed currency pair. Pro downward signal may be weak data from Europe and a press conference by Mario Draghi. If you also get better data from the US, the supply should not have a problem with breaking the next support levels at levels 1.1179 (76.4% Fibonacci retracement increases of 1,1016-1,1712) and 1.1155 (minimum of 28 August). Subsequently, the next props should be 1,1113-28 area (peaks in late July). In the long-term, natural target remains 1.1016 level.
In an alternative version, the currency pair will be supported by the data and the comments of the ECB President will support common currency, which will lead to strong growth. In this case, you must reckon with increases in the vicinity of the last peak at 1.1333 and 1.1368. Previously, however, demand will also have to deal with resistance at 1,1277-86.
In my opinion, a variant with a predominance of decline appears to be a variant more likely.