In all honesty, the content of the European Central Bank's press release and Christine Lagarde's speech was quite surprising. The regulator pretended that there was no deflation lasting for five months. More precisely, it feels like nothing is happening at all. For the most part, the official comments of the regulator, word for word, coincide with the previous ones. All the same ritual formulations about the growth of inflation to 2.0%, as a necessary condition for raising interest rates, and nothing new about the quantitative easing program. In general, the meeting turned out to be absolutely passable, although we were waiting for something more. And this is despite the fact that the situation with inflation is really catastrophic. The main result of this event is not so much that nothing has changed, but that the fears of market participants have not been justified. So the growth of the single European currency should not surprise anyone. And the fact that this growth looks somehow modest is due to a complete misunderstanding of the actions of the European Central Bank, to be exact, the absence of these very actions.
At the same time, as expected, the market did not notice data on applications for benefits in the United States at all. They were published simultaneously with the speech of Christine Lagarde, so the market participants were clearly not up to the American unemployed. You should have at least pretended to understand the actions of the European Central Bank. But the data came out surprisingly good. Thus, the number of initial applications decreased from 926 thousand to 900 thousand, instead of the predicted 915 thousand. The number of repeated requests, which was supposed to grow from 5,181 thousand to 5,540 thousand, decreased to 5,054 thousand. That is, the US labor market may have lost the pace of recovery, but it still continues to recover from the blow inflicted by the coronavirus pandemic.
Number of repeated applications for unemployment benefits (United States):
Today, the single European currency may decline slightly under the pressure of preliminary estimates of business activity indices, at least until the opening of the US session. They should all go down. Thus, the index of business activity in the service sector may decrease from 46.4 to 44.3, and the manufacturing index from 55.2 to 54.5. As a result, the composite PMI should fall from 49.1 to 47.2.
Composite PMI (Europe):
However, from the opening of the US session, the single European currency is likely to fully regain this decline, as in the United States, business activity indices should also decline. In particular, the index of business activity in the service sector increased from 54.8 to 54.3, and the manufacturing index increased from 57.1 to 56.0. So, it is not surprising that the composite PMI is expected to decline from 55.3 to 54.6.
Composite PMI (United States):
The EUR/USD currency pair in the course of a local upward move collided with the area of interaction of trading forces of 1.2130/1.2170, where there was a slowdown followed by accumulation.
The market dynamics during the last day did not have any sharp price changes, the volatility was below the average level. The results of the ECB meeting followed by a press conference provided support to speculators, but the price was only 30 points, which is considered an insignificant scale for the market.
If we proceed from the current location of the quote, we can see that market participants are still concentrating on the area of 1.2130 to 1.2170, forming a consolidation movement as a result.
Considering the trading chart in general terms, the medium-term upward trend is worth highlighting, where traders have been for a long time.
It can be assumed that market participants will continue to focus on the area of interaction of trading forces 1.2130/1.2170, with a possible deviation of 10 to 15 points from the established boundaries.
From the point of view of a comprehensive indicator analysis, we can see that the indicators of technical instruments are giving signal for a purchase relative to the minute and hour periods, due to the stage of rebound from the local minimum on December 9.
*Prezentowana analiza rynku ma charakter informacyjny i nie jest przewodnikiem po transakcji.
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