The EURUSD pair is little changed today as traders react to the mixed economic data from Europe yesterday and news that AstraZeneca has halted its coronavirus vaccine trial. The pair is also waiting patiently for the European Central Bank (ECB) decision that will come out tomorrow.
The EURUSD has paused a day after it declined following the release of economic data from Europe. According to Eurostat, the European economy contracted by 11.8% in the second quarter, leading to a year-on-year contraction of 14.7%. This decline followed a 12.1% decline in the first quarter and was mostly because of the coronavirus pandemic.
Now, analysts are paying a closer focus to the ECB, which will start its meeting today. With the European economy stabilising and with the boost of the EU recovery fund, analysts expect that the bank will not do anything this time. Instead, it will leave rates and quantitative easing unchanged during this meeting. In a report, analysts at Danske Bank said:
“Therefore, we do not expect the ECB to act next week, but rather signal a readiness to act should it be needed, noting also that incoming data will be providing a better guidance for potential policy actions.”
The EURUSD is also reacting to disappointing news about the much-touted coronavirus vaccine being developed by AstraZeneca. In a statement yesterday, the company said that it would pause its trial after a volunteer suffered significant health problems. This is a major setback since the company’s vaccine is one of the most waited in the industry.
EURUSD technical outlook
The daily chart below shows that the EURUSD pair reached a YTD high of 1.2000 on 1st September. Since then, the pair has been in a sharp decline. Indeed, it has dropped in the past six consecutive days and is now trading at 1.1778. The price has also moved below the support of the ascending channel that is shown in blue. It has also managed to move below the important 25-day exponential moving averages.
Therefore, it seems like the rally of the EURUSD has run its course, which means that it may continue falling. If it does, the next likely target will be the 50-day EMA at 1.1672. On the flip side, a move above the psychological level of 1.1900 will invalidate this trend.
EURUSD technical chart