EURUSD Unchanged after BCE announcements

The European Central Bank decided on Thursday to slightly ease its exceptional support measures for the economy put in place since the beginning of the health crisis, slowing the pace of debt buybacks.

The ECB will continue to provide ample market liquidity and support growth until employment returns to end-2019 levels. It will also remain firmly in place as long as Covid remains a threat to activity.

The institution has raised its economic forecasts for the eurozone, saying it now expects growth of 5% this year, up from the 4.6% forecast in June.

The purchases of securities on the markets made under the Asset Purchase Program (APP), older than the PEPP, remain fixed at 20 billion euros per month. The ECB also maintained its key interest rates, with the refinancing rate remaining at zero and the deposit rate at -0.5%.

The ECB now expects inflation to reach 2.2% in 2021 (up from 1.9% forecast in June), above its 2% target, but expects it to fall to 1.7% in 2022 and 1.5% in 2023.

From a technical perspective, the euro is stable against the dollar after Christine Lagarde's announcements. The EURUSD was consolidating in a descending range, so the recent breakout from the top opens the way for bullish recovery. Nevertheless, the pair is still stuck on the resistance of 1.1875. For the time being, the market is making a pullback on the upper bound of our pattern to the 50-period moving average.

 (Chart Source: Tradingview 09.09.2021)

By moving the height of the downward expansion to the breakout level, all indications are that the euro has the ability to regain the psychological threshold of 1.20. The break of 1.1875 is therefore necessary to release the future bullish potential. On the other hand, a return below 1.1775 would invalidate this scenario and the market would begin a consolidation phase within a range between 1.1875 and 1.1700.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.