Monetary policy divergence is still the name of the game: while doubts creep in about the ability of the Fed to raise rates this year, in the euro-zone it’s easing as usual.
EUR/USD has fallen back to the lower range under 1.1375 but still holds the post US retail sales rally. What’s next?
In a speech today, Mario Draghi reiterated that the ECB will continue implementing the QE program in full. The bond buying program is set to last until sustained adjustment in inflation. Recent figures have been not-as-bad as beforehand, but still point to a dearth of inflation.
The president of the Frankfurt based institution also did some tapping on his own back by saying that unconventional measures have been potent so far, while admitting it could have side effects.
The US dollar suffered badly from the poor retail sales report. Tis sent EUR/USD to initially trade in a narrow range between 1.1340 and 1.1375. It then shot higher to as high as 1.1444, but it is now back down.
The greenback also got a boost from better than expected jobless claims numbers.
It’s good to see that markets are data driven and trade in clear ranges.
Tomorrow we have an important data point in the US: the University of Michigan’s Consumer Confidence number. See how to trade US CC with EUR/USD.
Here is the chart:
