The ECB decision is comin’ right up!
Can another rate hike sustain EUR/USD’s rally past this inflection point?
Before moving on, ICYMI, yesterday’s watchlist looked at AUD/NZD’s double top pattern after the downbeat Australian CPI report. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
FOMC hiked interest rates by 0.25% from 5.25% to 5.50% as expected, maintained bias to keep tightening as needed
Fed head Powell says that September meeting is still live, decision to be based on a couple more CPI reports and jobs data
Canadian PM Trudeau announced a cabinet reshuffle in order to put more focus on economic recovery
Australian import prices fell by 0.8% q/q as expected in Q2, following earlier 4.2% slump as the export price index tumbled 8.5%
German GfK consumer climate index improved from upgraded -25.2 reading to -24.4 vs. -24.8 forecast to reflect slight decline in pessimism
Spanish unemployment rate dipped from 13.3% to 11.6% vs. 13.0% forecast, as the number of employed rose by 603,900 in Q2
Price Action News
The U.S. dollar was already on the back foot leading up to the FOMC decision, as some expected Fed officials to tone down their hawkish rhetoric.
Although the Fed hiked rates by 0.25% as expected and Powell kept the door open for a September hike, the dollar still sold off across the board after the announcement.
By the time the Asian markets opened, the dollar staged yet another tumble, suggesting that traders aren’t exactly optimistic that the U.S. central bank can sustain its aggressive tightening bias for much longer.
Upcoming Potential Catalysts on the Forex Economic Calendar:
ECB monetary policy decision at 12:15 pm GMT
U.S. advanced GDP at 12:30 pm GMT
U.S. core durable goods orders at 12:30 pm GMT
ECB press conference at 12:45 pm GMT
Tokyo core CPI at 11:30 pm GMT
Australian PPI at 1:30 am GMT
Australian retail sales at 1:30 am GMT
BOJ monetary policy decision coming up
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
EUR/USD: 15-min
This pair is cruising higher inside a small ascending channel seen on its hourly time frame. Based on that sharp bounce off the channel support, bullish vibes still seem to be pretty strong.
However, the rally might be cut short as EUR/USD approaches the channel top, which happens to be near R2 (1.1150) and a minor psychological mark. This is also right around its intraweek highs.
If the ceiling holds, the pair could fall back to the 1.1100 major psychological mark or the channel bottom.
Sustained bearish momentum might even spur a break lower and a move down to the pivot point (1.1080) or the previous day lows.
Upcoming top-tier catalysts like the ECB rate decision and U.S. advanced GDP release might determine where this pair is headed next. Note that another ECB hike is eyed while the U.S. growth figure could point to weaker economic activity in Q2.
In any case, expect additional volatility for this pair closer to these major events!
