Euro eases ahead of the ECB interest rate decision
June 4, 2020
Posted by: Analysis Team
Category: FOREX, Technical Analysis
The Australian dollar eased slightly as the market reacted to the better-than-expected Australian retail sales numbers. According to the bureau of statistics, retail sales declined by a whopping 17.7% in April after rising by 8.5% in the previous month. This decline was better than the expected 17.9%. In the same month, exports declined by 11% while imports fell by 10%. This led to a trade surplus of more than $8.8 billion. In the past month, the Aussie has been the best-performing currency in the developed world mostly because of Australia’s trade relationship with China.
The euro eased slightly ahead of the European Central Bank (ECB) interest rate decision. Analysts expect the bank to leave the deposit facility rate unchanged at -0.50%. They also expect the bank to continue with its quantitative easing program, which involves buying unlimited amounts of government and corporate bonds. The decision will come at a time when economic data from the region has been improving. The manufacturing and services PMI data released this week has shown progress. This will be the first decision after the European Commission unveiled its large $826 billion funding.
The British pound eased slightly ahead of the construction PMI data that will be released later today. Analysts polled by Bloomberg expect the PMI to improve from the previous record low of 8.2 to 29.7. Traders are also watching the ongoing Brexit talks. Meanwhile, the Swedish statistics office will release the industrial production data while Eurostat will deliver the April retail sales numbers. In the United States, the Labour Department will deliver the jobless claims data for the previous week. These numbers will come a day ahead of the official May nonfarm payrolls data.
The EUR/USD pair is trading at 1.1215, which is slightly below yesterday’s high of 1.1254. On the four-hour chart, the price is above the 50-day and 100-day exponential moving averages. The RSI is slightly below the overbought level of 70. Also, the price is above the Ichimoku cloud and slightly above the 61.8% Fibonacci retracement level. Therefore, the pair may see some volatility ahead and after the ECB decision.
The GBP/USD pair declined slightly to the current low of 1.2540, which is below yesterday’s high of 1.2613. On the four-hour chart, the price is slightly above the 61.8% Fibonacci retracement level. The price is also slightly below the important resistance level of 1.2644. The price may continue falling today as bears attempt to test the 61.8% retracement at 1.2518.
The AUD/USD pair declined to an intraday low of 0.6898, which is below the day’s high of 0.6980. On the four-hour chart, the price is above the 50-day and 100-day exponential moving average and significantly higher than the 61.8% retracement. The pair is also forming a bullish pennant pattern, which means that it will likely breakout higher.