Alex Borzak
Yesterday, on June 5th, a major event took place. The European Central Bank announced a series of measures following the 2-day meeting. The measures are aimed at monetary easing. Apparently, this should have pressed the common currency. However, the common currency didn't decline a lot against the US Dollar and other majors, Market Leader reports.
It should be noted that the ECB made a series of key decisions. The list includes:
Cutting 3 short-term interest rates, including the refinancing rate from 0,25% to 0,15%, the margin credit rate from 0,75% to 0,40% and the overnight deposit rate from 0,0% down to -0,10%;
- backing 4-year refinancing operations, TLTRO;
- introducing the ABS asset-backed purchase program;
- suspending the weekly SMP program.
During the first part of the European trading session, the US Dollar was losing value against all other majors. The Euro gained 0,04% versus the Dollar to touch 1,3618.
Right after the ECB announced its interest rate decision, the market grew enthusiastic, thereby giving the US Dollar a chance to gain 0,29% against the common currency.
Later on, Mario Draghi held a press conference. During the conference, he gave more details on the introduced package of measures aimed at stimulating consumer credits and inflation growth up to the 2% target.
When the full package of measures was announce, EURUSD set a new local low by touching 1,3503, which was a 0,6% decline. The scale of the measures probably exceeded market expectations.
Still, after Mario Draghi shared the ECB's forecasts, mentioning positive and stable economic growth expected in 2015-2016, the market probably concluded that the introduced measures were unlikely to trigger a major decline of the Euro against other currencies. Therefore, by the time Mario Draghi answered all the questions, EURUSD had already recovered up to 1,3585.
The volatile trading day ended with a big-scale decline of the US Dollar: EURUSD rallied up to 1,3654 while the USD index declined from 81,06 up to 80,34.
Dow Jones rallied by 0,59% up to 16 836,11, Nasdaq gained 1,05%, to touch 4 296,23, S&P500 rallied by 0,65%, up to 1 940,46 and nearing the psychological level of 2 000,00.
EURUSD: Near-Term Prospects
According to Masterforex-V Academy, today's key event is scheduled for the beginning of the American trading session. The US Department of Labor is going to release some employment stats, including May's rate of unemployment coupled with the amount of new jobs created within the scope of the US non-farm sector. The rate of unemployment is expected to grow from 6,3% up to 6,4% while the amount of new jobs is expected to decline from 288K down to 218K. If the actual figures match the forecast, we are likely to see dollar weakening.
Technically, if to consider the H4 chart of EURUSD, we may expect the currency pair to come out od the 1,3585-1,3669 consolidation range after the key data are released. If the price comes out od the range and consolidates outside of it, this will probably prompt traders the direction of the near-term trend.
In particular, a break above 1,3669 will give way to 1,3733 - 1,3774. Alternatively, a break below 1,3585 will give way to 1,3502 - 1,3476.
The Binary Option Department of Masterforex-V Academy recommends going long, i.e. buying call options on EURUSD when the price retraces back to the bottom of the consolidation range. The lifetime of the option is under 3 hours.
Alex Borzak
