The Euro is slowly growing after the ECB rate decision. Overview for 16.07.2020

16.07.2020

Before the ECB meeting on Wednesday, EURUSD managed to break its multi-month high but later started a correction. Such dynamics are quite logical amid uncertainty in decisions of the major European regulator. 

During the meeting, the European regulator kept all of its rates intact: the interest rate at the all-time low value of 0%, the deposit facility rate at -0.5%, and the marginal lending rate at 0.25%. Judging by moderate growth in EURUSD, market players are not yet ready for risks in trading. 

Most likely, the ECB won’t revise its monetary policy because it is currently working to support risky European assets. However, a high level of uncertainty in the economy isn’t going anywhere. A signal to close the stimulus program may result in sovereign debt and have a negative influence on the European economy and currency.

In today’s world filled with the coronavirus pandemic, as well as the global economic slump, a decision to end the stimulus measures may be an ill-advised act. 

The current critical issue is creating a recovery fund to help the economy to rise. Talks and discussions about this fund are planned for the EU summit on July 17th and 18th. 

In addition to that, it should be noted that the ECB doesn’t have much room for maneuver and measures to loosen its monetary policy if compared with the US Federal Reserve, and that also may provide EURUSD with significant support. 

One may reach the conclusion that the key role to define the dynamics in EURUSD in the nearest future will the American regulator and its aggressive policy because the COVID-19 pandemic did serious damage to the country’s economy and its economic outlook looks pretty vague. 

In case the uncertainty and slowdown in the global economy continue, demand for risky assets will go down, while that for “safe haven” ones, such as the USD, – increase. 

Attention!

Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.