EURUSD rebounded back to above 1.1130 ahead of the ECB meeting outcome. The Federal Open Market Committee (FOMC) announced a 25bps increase to the Fed funds rate and Fed chair Powell sounded more towards the dovish side. Now the markets wait for the European Central Bank’s (ECB) monetary policy decision and ECB President Christine Lagarde’s speech for confirmation of future rate trajectory. European Central Bank is widely expected to follow US Federal Reserve in raising interest rates by 25 basis points today. However, the investors should closely monitor ECB President Christine Lagarde’s speech to seek more details about the future monetary policy because Inflation in the euro area remains far too high, still the latest inflation data from the Eurozone and Germany have been less than optimistic.
Global benchmarks saw another day in the green after the U.S. Federal Reserve Chair Jerome Powell said that they are no longer forecasting an economic recession. Powell also noted that the FOMC will take a data-dependent approach to future hikes. Moving ahead to the North American session, traders and investors should closely monitor the release of US Durable Goods Orders for June and the first readings of the US Gross Domestic Product (GDP) for Q2, which is expected to ease to 1.8% from 2.0%.
Crude oil futures trade flat after testing the multi-month highs in the previous trading session. Crude oil prices extended the weekly gains on Wednesday driven by broad dollar weakness and expectations of a slowdown in the Fed rate. The latest EIA crude inventory data showed the US crude oil inventories went down by 0.600 million barrels in the week to July 21st, below market expectations for a 2.348-million-barrel draw.
In the currency market, the dollar has weakened against almost all of its peers, especially against the euro, British Pound, and Swiss Franc. In the meantime, the Japanese Yen bulls catch their breath as investors refrain from placing aggressive bets ahead of the Bank of Japan's meeting on Friday. BOJ Governor Kazuo Ueda was recently quoted by the media as saying the country was still far from stably achieving the bank's 2 percent inflation target.
The precious metal remains steady after a less-hawkish-than-expected FOMC decision. As of this writing, gold price trades above $1980. The bullish sentiment was boosted after FED chair Powell hinted that the Fed might consider pausing rate hikes if necessary. The metal will extend the upside move today if the US preliminary GDP, the weekly Jobless Claims and Durable Goods Orders for June fail to deliver strong numbers.
On the data front, the Federal Reserve raised the Fed funds rate by 25 basis points to 5.25%-5.5%, in line with expectations. Policymakers said they will continue to monitor the implications of incoming information for the economic outlook. FOMC statement was slightly more optimistic about growth compared to previous press releases, while guidance on monetary policy going forward remained basically unchanged.
Moving ahead today, the important events to watch:
Eurozone – ECB interest rate decision and statement: GMT – 12:15
US – GDP: GMT – 12:30
US – Durable goods orders: GMT – 12:30
Technical Outlook and Review
EURUSD: For today, If the upside momentum continues then the next upside level is to watch at 1.1150 and 1.1180. On the downside, any meaningful pullback now seems to find some support near the 1.1050 zones, below which the slide could extend further towards the 1.1010 and 1.0980 regions.
The important levels to watch for today: Support- 1.1050 and 1.0980 Resistance- 1.1150 and 1.1180.
GOLD: Technically the overall momentum remained bullish over the last few days. On the bullish side, today the resistance stays above 1985, and a break above this exposes the index to the $1990/93 level. On the flip side, rejection, and pullback from the 1985 resistance allow for a dip towards 1972 and with 1965 and 1962 forming additional downside targets.
The important levels to watch for today: Support- 1972 and 1960 Resistance- 1985 and 1993.
Quote of the day – “A lot of people get so enmeshed in the markets that they lose their perspective. Working longer does not necessarily equate with working smarter. In fact, sometimes is the other way around.” – Martin Schwartz.