The global stock markets posted modest gains ahead of the ECB rate decision as most of the investors are expecting dovish policy from Mario Draghi. The euro dropped 0.5% to $1.1151, the lowest level since May 30. Official data showed that the eurozone Consumer Confidence Index climbed to -6.6 in July (vs -7.1 expected) from -7.2 in June.
European stocks posted further gains, with the Stoxx Europe 600 Index rising 1.0%. Germany’s DAX jumped 1.64%, the U.K.’s FTSE 100 increased 0.6%, and France’s CAC was up 0.9%. While the Dow Jones Industrial Average edged up 17 points (+0.1%) to 27171, the S&P 500 added 8 points (+0.3%) to 2985, and the Nasdaq Composite was up 57 points (+0.7%) to 8204.
Economic Events to Watch Today
EUR/USD – Daily Outlook
The EUR/USD currency pair maintained 4-day falling streak amid ECB rate decision. Today in the early market the EUR/USD currency pair dropped for the 4th continuous day due to possibilities of rate cuts by the European Central Bank.
Besides, the Europen Central Bank broadly expected to move policy rates unchanged, but on the flip side, the pair is ready for rates cut in the upcoming months by eliminating the tightening bias from its interest rate forward guidance.
Meanwhile, the market gave indications to rate cut for 10-basis points expected in September. Therefore, this is obvious from the EUR/USD pair keep on the back foot from the 25 July of 1.1412 to Wednesdays low of 1.1127. Moreover, the EUR could be able to support 1.11, but if the European Central Bank would boost possibilities for a rate cut in September.
Daily Support and Resistance
Pivot Point 1.1142
EUR/USD – Trade Tips
The EUR/USD pair has traded exactly as we forecasted, hitting both of our levels of 1.1170 and 1.1164 today. Let’s keep an eye on 1.1165 to stay bullish and bearish below this level today.
GBP/USD – Daily Outlook
The GBP/USD currency pair dropped due to due changes in the UK cabinet. The GBP/USD currency pair dropped to 1.2465 after the Boris Johnson won the PMs post on Tuesday and increased concerns of a no-Brexit deal. During the first day of Boris Johnson as a British Prime Minister, he overhauled to the British Cabinet and got some support for the hard Brexit from the leading position holders.
Moreover, all investor’s eyes will be on further hints concerning the new Prime minister Boris Johnson on how to moves forward along his duties. Whereas focusing on the durable goods orders and the United Kingdom CBI Distributive Trades Survey details.
At the U.S. front, there is a possibility in the U.S. data to recover to 0.7% from -1.3% in June; the United Kingdom statistics could soften the previous plunge of -42% to -10%.
Daily Support and Resistance
Pivot Point 1.2478
The British pound slid 0.3% to $1.2478. Boris Johnson, as expected, was elected the Conservative Party leader and will, therefore, become the next prime minister. On the other hand, Bank of England Monetary Policy Committee member Michael Saunders and chief economist Andy Haldane signalled that they will not push for a rate hike.
GBP/USD – Trade Tips
GBP/USD was facing solid support at 1.2490, marking the 38.2% Fibonacci support area. Technical indicators have lost bullish power after entering the positive territory. The GBP/USD is now heading lower within neutral sections, placing the risk toward the downside.
The potential upward could increase if the pair surpasses the mentioned daily high, but a more consistent advance seems likely only beyond 1.2560, where the pair set its high last week. Today, consider staying bullish above 1.2480 and bearish below the same to target 50 pips on both sides. Good luck!