Today, on June 3rd, the common European currency has already gained a little bit o value against the US Dollar. In particular, right before the start of the European trading session, EURUSD went 0,07% up. It is currently consolidating in a tight range close to 1,3607.
Apparently, traders do not want to go risky right before today's major event, which is the eurozone's inflation report which is set to be released right after the end of the European trading session, Market leader reports.
At the same time, Spain and Italy, the 3rd and 4th economies of the eurozone, are planning to release their unemployment reports for April. Market participants do not expect major changes in the unemployment rate in those countries. As we have just mentioned, today's key economic report for the Euro is the eurozone's preliminary consumer price index for May.
It should be noted that the similar inflation report from Germany released today turned out poorer than expected, which means that today's figures may turn out to be poor as well. Experts predict that the inflation rate is not going to exceed 0,6% in 2014. If the actual figures come out stronger than expected, we are likely to see the Euro strengthening against its American counterpart today.
At the same time, the key even of the week is the meeting of the ECB's monetary policy committee scheduled for June 4th and 5th. The economists and investors are waiting for decisive moves from the ECB's Mario Draghi. These moves are expected to be aimed at overcoming the stagnation processes in the eurozone economy and stimulating inflation.
In particular, some experts assume that the ECB may finally decided to introduce negative interest rates in June. It seems like the ECB's major goal is to control inflation in the area. The central bank may also influence employment and economic growth. Apparently, interest rates are some of the key instruments for managing inflation and economic activity.
If the current benchmark interest rate (0,25%) is down, banks will get even cheaper borrowing opportunities, thereby stimulating business lending and investments, which in its turn may stimulate job creation.
Still, some market participants are afraid that a short-term rate cut may fail to press the common currency. It seems like this is already priced into the market. At the same time, of the ECB introduces negative interest rates, it is going to be the first major central bank to use this instrument. This instrument is used rarely. So its effect on the economy isn’t studied comprehensively. This may result in people leaving their savings at home instead of depositing them, which will result in a major income decline for local banks. Even when the bank offers more borrowing opportunities for businesses, they may well be reluctant to borrow while being uncertain about the current strength of the European economy.
EURUSD
According to the comprehensive analysis made by Masterforex-V Academy, EURUSD is showing a reversal pattern – probably «double bottom». It appeared as the result of price consolidation close to 1,3585. This level may prompt the direction of the forthcoming price move depending on how the price reacts to it.
While the price is still below the MF sloping channel, the decline may continue down to 1,3585 and then further down to 1,3562 and below.
Alternatively, the Euro may strengthen after breaking above the MF sloping channel. In this case, the price is likely to head for 1,3635 and 1,3649. A break and consolidation above those levels will indicate the bulls' domination, thereby giving way to further highs.
