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Trading on the euro/dollar pair closed up on Wednesday. As the dollar weakened across the market, the euro came closer to 1.14 level, which has been tested in Asia.
At the ECB forum in Portugal, the heads of the major central banks provided support to their respective national currencies with their speeches. Bank of England governor Mark Carney hinted at the possibility of tightening monetary policy. Traders took these comments as a sign that an interest rate hike is coming. The pound responded with a 140 pip surge.
The head of the Bank of Canada, Steven Poloz, said that the reduction in interest rates imposed in 2015 had served its purpose. He pointed to Canada’s high economic growth rate in the first quarter. Traders again took this as a sign that interest rates would be raised in the near future. The Canadian dollar rose by 100 pips, and ended the day 140 pips up. The US dollar is retreating on all fronts.
Day’s news (GMT+3):
- 09:00 Germany: Gfk consumer sentiment survey (Jun);
- 11:30 UK: consumer credit (May), M4 money supply (May), mortgage approvals (May);
- 12:30 Eurozone: ECB member Weidmann’s speech;
- 15:00 Germany: CPI (Jun);
- 15:30 USA: GDP annualised (Q1), GDP price index (Q1), initial jobless claims (23 Jun);
- 20:00 USA: FOMC member Bullard’s speech.
EUR/USD rate on the hourly. Source: TradingView.
The price moved with the U3 line for 20 hours until the ECB announced that the market had misinterpreted Draghi’s comments at the forum the previous day. He apparently didn’t mean that the stimulation program would soon be reversed. Nevertheless, buyers bought euros after a drop to 1.1292 on the back of a weakening dollar.
In Asia, the price recovered to 1.1419. There’s a strong resistance around 1.1445 – 1.1470. At the time of writing, the euro is trading at 1.1396. Judging by Carney’s and Poloz’s comments, buyers won’t rest until they reach this price range.
