FOREX NEWS: DRAGHI TAKES CENTRE STAGE AS THE MARKET PREPARES FOR ECB MEETING
EUR/USD
Forex News: Yesterday the ADP Non-Farm Employment report showed a reading of 298K, way above the expected 185K but the Dollar’s reaction was mixed, strengthening at first and then erasing all gains and moving back to where the initial drop started.
Technical Outlook
There is no clear reason for the climb back up but it must be noted that the entire move is just under 30 pips and no major S/R level was broken so we may very well see another drop generated by a delayed effect of yesterday’s U.S. jobs data. The pair is still under the 50 period Exponential Moving Average so the bias is bearish but direction will probably be decided by the ECB meeting today.
Fundamental Outlook
Today the focus is on the Euro as the ECB will announce their interest rate at 12:45 pm GMT, followed at 1:30 pm GMT by a press conference held by ECB President Mario Draghi. The rate is not expected to change from the current 0.00%, so unless anything surprising happens, the event will mostly go unnoticed because usually traders wait for Draghi’s reaction at the press conference. The way he answers journalists’ questions will have a high impact on the Euro, especially if he hints towards a rate hike.
GBP/USD
Price action established 1.2215 as resistance and continued lower as the Pound weakened and the greenback strengthened throughout the day, generating a bearish session overall.
Technical Outlook
The pair is headed towards the support at 1.2125 but the Stochastic and Relative Strength Index are both showing clear oversold condition and also bullish divergence (price is making lower lows while the oscillator is making higher lows). These factors make us anticipate a bounce higher, possibly into the newly established resistance at 1.2215, but may extend into 1.2250.
Fundamental Outlook
It’s another slow day for the Pound as the United Kingdom did not schedule major economic news releases, thus the pair will be mainly affected by the technical side.