ECB keeps rates unchanged, but policy makers are divided

North American Trading Forex News July 22, 2021

ECB kept rates unchanged and Pres Lagarde commented that:

  • We want lasting inflation of 2%. Can sway a little
  • Inflation cannot be less than 2% to raise rates
  • Nobody wants to squeeze prematurely

Although no one wants to adjust prematurely, Weidmann and Wunsch said they were against the new ECB rate guide. In particular, they questioned the length of the engagement and the lack of clarity.

different opinions in the board of governors were consistent with the price action in the EURUSD following the rate decision. EURUSD price declined in an ascending and descending range of around 42 pips right after the event. Subsequently, that range widened to 72 pips (with higher and lower extensions) at the end of the day. That volatile move took the price of the pair above and below the MAS by 100/200 hours on several occasions, with the latest effort directed to the downside. Although it is around 26 pips lower on the day, the lower low managed to stay above Tuesday’s trading low at 1.1755 and Thursday’s low at 1.17512. low price reached 1.17567. price is trading at 1.1768 towards the end of the day.

In other news today, existing home sales were slightly below expectations at 5.86 million versus 5.9 million. Supply remains relatively low at 2.6 months compared to 2.5 months in May. In other real estate news, DR Horton, the largest US homebuilder, reported strong gains today, but stocks fell after saying sales orders plunged 16.5% in the quarter. y cited labor shortages and rising timber prices. However, the price of lumber has started to turn lower and is trading towards the late 2020 levels at $ 716.90 after climbing to a high of $ 1733 reached on May 10.

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In today’s currency market, the British pound is ending up as the strongest of the majors, followed by the Australian dollar. EUR and CHF fight for the weakest.

GBPUSD; For GBPUSD, it moved above the 50% retracement of the month’s trading range at 1.17403 and held above that level in the New York session (it tested the level and found buyers). price also broke its 200 hour moving average for the first time since last Friday’s trade. That moving average stands at 1.37668. price is closing near that level.

EURUSD: As mentioned above, the EURUSD fell towards Tuesday and Wednesday lows of 1.1755 and 1.17512, but failed to break below those levels today (the low reaches 1.17567). 100 hour moving average is higher at 1.17877. You will need to go above that level again to further skew the bias. Conversely, a move below 1.175121 in Friday’s trade should lead to further downside momentum. low price for all of 2021 reached 1.17035 on March 31. Reaching that level is a possibility on the new trading day.

USDJPY: USD / JPY traded in a narrow 35 pips trading range throughout the day with support against the 200 hourly moving average at 110.04 and resistance against the 50% midpoint of the July trading range at 110.357. Closing prices for the day are close to 110,193. A move below the 200 hour moving average would increase the downtrend with the 100 hour moving average at 109.89 as the next target to hit and exceed. On the upside, a move above 50% would have traders looking towards last week’s high of 110.693.

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USDCAD: USDCAD was another currency pair that posted a below-average trading range today. low to high trading range reached 65 pips. It was well below the 101 pip average for the last 22 business days. However, from a technical point of view, the price remained below its 200 hourly moving average at 1.25921. That moving average tested at least 11 bars per hour today. Sellers kept the pair under control against that moving average level. On the downside, the 1.2525 level was yesterday’s low (and week’s low). Today’s low price was just above that level at 1.25283. It goes without saying that breaking the 200 hourly moving average at 1.2592 or breaking below the week’s lows at 1.2525 are technical levels that should help define the next momentum move in the pair.

In other markets today, US equities advanced for the third day in a row with the NASDAQ index leading the way in relatively quiet markets:

  • Dow industry average increased by 25.35 points or 0.07% from 34823.35
  • S&P index rose 8.79 points or 0.20% to 4,367.48
  • Nasdaq index rose 52.64 points or 0.36% to 14684.59.

In European markets, the main indices moved higher with the exception of the UK’s FTSE 100, which fell -0.43%.

In the US debt market, Yield to 10 ends the day unchanged after trading between 1.233% and 1.317%. 30-year yield fell -1.1 basis points to 1.919% after trading as high as 1.981% earlier in the day.

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