EUR/USD could hit 1.1870 level after ECB pronouncement

Justin Freeman

The single European currency saw its value go up and down over the course of Thursday – though now, according to analysts, it could be about to consolidate.

The euro was spotted at 1.1916 at one stage on Thursday, and this was largely as a result of an announcement from the European Central Bank (ECB) that economic recovery across the bloc is likely to see a boost in the coming months.

Despite the impact of the coronavirus pandemic, the ECB said that its predicted bloc-wide growth rates – when measured in real gross domestic product (GDP) – were in fact being altered to reflect the more positive mood.

It also said that its predicted growth rates in 2021 would hardly change at all.

The ECB confirmed that it would keep its current monetary policy outlook in place for what appeared to be the long term.

Its net purchases of assets, for example, would remain as they are currently until well into next year.

However, global forces – such as the performance of US equities – meant that the currency later went back down on Thursday, before moving back up again to 1.1813.

According to some strategists though, the euro is now going into what is described as a “consolidation” phase in its pair with the greenback.

One said that the pair was looking at moving within a small range over the course of Friday.

On the lower end, it was suggested, the currency could go to 1.1775.

At the higher end, it could end up being spotted in the 1.1870 region.

However, it is believed that the scope of its potential rise is unlikely to extend much further than that – at least not in the next few days.

The 1.1916 level was expected to be the highest potential position it could reach.

Like its expected movement on Friday, its broader outlook is also somewhat uncertain.

There is some suggestion that there is a bearish trend emerging, though strategists cautioned that this was unlikely to materialise unless the euro experienced a bad day in its greenback pair.

For this trend to kick in, they suggested, the 1.1750 level would have to be breached.

In terms of fundamental analysis, meanwhile, the currency pair was also expected to respond to some major events on the economic calendar across the next few days.

One such event will be the release of industrial production figures for across the bloc.

These will come out at 9am GMT and will cover the month of July.

Overall, they are expected to show a month-on-month rise – but a significant year-on-year drop.

The currency may also be affected by a key vote in the British Parliament on Monday on the topic of Brexit.

At the moment, there is no confirmed schedule for this vote, which will be on the Internal Market Bill.

Justin Freeman

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