Euro Declines After ECB Decision To Hold Rates

Fundamental Analysis

* ECB Halts: The euro declined against the dollar after the European Central Bank (ECB) revealed its interest rate decision. The ECB opted to keep interest rates unchanged, while suggesting a potential future rate cut, though this guidance remains ambiguous and conditional. No specific future actions were detailed, as the ECB cited ongoing high domestic price pressures and anticipates inflation staying above target well into the next year. Market participants were left to decipher ECB President Christine Lagarde’s remarks for insights on the central bank’s forthcoming steps. Concurrently, the dollar index rose due to unexpectedly strong manufacturing sector data. In the U.S., manufacturing activity in the Mid-Atlantic region exceeded expectations in July, fueled by a significant increase in new orders, further boosting the dollar.

Technical Analysis

* Technical Breakout: EURUSD was traded lower following recent breakout below the previous support level 1.09200. MACD which illustrate bearish momentum signal suggest the pair to extend its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 1.08600. Conversely, a potential reversal is also to be expected and the price could head towards 1.09200.

Potential Risks

Moving ahead, investors will focus on next week’s data, including the pan-EU Harmonized Index of Consumer Prices (HICP) inflation data. With today’s data being mostly low tier for the Euro, investors are likely to hold off and await next week’s figures to assess the ECB’s potential rate direction.

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Monitoring

Stay updated on US and Euro data, central bank updates and any shifts in the US Dollar’s strength by following PU Xtrader’s financial news page.

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