EUR/USD: outlook for July 25-31
During the past week EUR/USD moved lower, but remained in range, within which it’s staying since the end of June. The euro was affected by extremely weak economic sentiment indicators from Germany and the euro area. In addition, despite the fact that traders didn’t expect the European Central Bank to ease policy on Thursday, they were looking forward to dovish comments by the regulator’s president Mario Draghi.
However, Draghi gave very little insight on future policy of the ECB. He noted that growth and inflation were moving along the path projected in June and that the regulator will monitor the economic situation. Draghi also said that if needed the ECB will act using all available tools. However, the regulator’s head gave no hints that monetary stimulus may be extended in September. That’s why there was no big euro selloff after the meeting. In addition, the euro area’s July manufacturing and services PMIs released on Friday turned out better than expected showing that these sectors aren’t much concerned about Brexit.
The economic calendar for the next week is also rather interesting. On Monday Germany will release retails sales and Ifo business climate. On Wednesday German consumer climate will be published and on Friday we’ll learn euro area’s flash inflation and preliminary GDP for Q2. Statistics from the US may be even more important for EUR/USD, so check American calendar as well. We think that there will be opportunities to sell the pair on its attempts to get a bit higher, but with the lack of action from the ECB we expect no strong decline in the euro. Support is at 1.0970 and 1.0920. Resistance is at 1.1080 and 1.1130.