EUR/USD Remains Low, ECB ‘Forward Guidance’ Disappointing


  The EUR/USD pair remained traded lower around the weekly lows after failing to break the barrier at 1.1825. As expected, the European Central Bank in its latest monetary policy decisions still maintains interest rates and stimulus programs. However, the announcement disappointed the market as the long-awaited forward direction remained unclear. Policymakers said that interest rates would remain at current levels or lower “until seeing inflation reach two per cent by the end of the projection and persist throughout the period and banks assess that there has been sufficient progress in underlying it”. President Christine Lagarde said the economy was on track for strong growth in Q3. However, he maintained that the Delta coronavirus variant was at risk of disrupting recovery in the services sector while the barrier could potentially affect the manufacturing sector in the short term. To find trading opportunities, the focus today shifts to the preliminary estimates of the EU and US July PMI data to be published by Markit. and it judges that realized progress in underlying inflation is sufficiently advanced. Asian and European equities advanced, but Wall Street struggled to post modest gains. Softer-than-anticipated US macroeconomic figures dented the markets mood. US Treasury yields peaked at fresh weekly highs but finished the day in the red. The focus on Friday will be on growth-related data as Markit will release the preliminary estimates of its July PMIs for the EU and the US.

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