Dovish ECB sends Euro lower, NFP next

Yesterday, was an important day, as there were key economic releases and events were scheduled in both European and NY sessions. The European session started with services PMI in the Eurozone and in the UK. The outcome was mostly mixed, as the services PMI fell short of expectations, but overall growth prospects remain strong in the Eurozone and UK.

Euro zone services PMI
The Euro zone services PMI was released by the Markit Economics. The outcome missed the expectations as services PMI fell from 52.6 to 52.2. However, the report painted a nice picture, and mentioned that “the outlook for the Eurozone economy remains on the upside, with new orders rising and a slight accumulation of backlogs of work during March”. The report also highlighted that March saw further job creation in Germany and Ireland, and a notable shift closer to stabilization in France following a run of job losses that started in November last year. The EURUSD mostly traded in range after the release.

Euro area retail sales
Later, the Euro area retail sales data was also published. The outcome was positive, as the seasonally adjusted volume of retail trade was up by 0.4% in euro area in February 2014 compared with January 2014. The report mentioned that “In February 2014 compared with February 2013 the retail sales index increased by 0.8% in the euro area and by 1.5% in the EU28”. The main reason for the rise was an increase of 2.0% for the non-food sector and of 0.8% for automotive fuel.

The EURUSD buyers enjoyed the outcome, as the pair traded a touch higher in the European session, but failed to hold the ground, as the market was eyeing the ECB interest rate decision.

ECB interest rate decision
The main event was the ECB interest rate decision. The central bank decided not to introduce any changes in interest rates, which caused the EURUSD to jump higher. The pair traded close to the 1.3780 level. However, the event which made the difference was the ECB press conference. The ECB President Mario Draghi sounded more dovish than expected by the market. The reaction from the Euro buyers was not positive, as the sellers took control and pushed the pair lower towards the 1.3700 level.

The most important comments which caught the attention of sellers were regarding the QE program and Euro strength. The ECB president possibly hinted at QE, which is obviously not a good sign for Euro bulls. He also mentioned that central bank would keep an eye on exchange rates, which again did not go down well with the Euro, as the EURUSD pair fell sharply from 1.3790 to 1.3720 level, and traded as low as 1.3698. The pair failed just around the channel resistance zone, as can be seen in the chart below. The pair after down-move found support around the previous important support zone. There are several supports on the way down for the pair.

US Nonfarm Payrolls and unemployment rate
Today is another important day, as the US jobs data will be published in the NY session. The market is expecting as many as 200K jobs addition, which is on the higher side. The unemployment rate is also expected to fall from 6.7% to 6.6%. So, the expectations are very high. Any miss in the outcome might cause the US dollar to move lower. However, in line data might help the US dollar to gain some ground against less oversold currency pairs.

So, keep an eye on all important events friends and trade accordingly.

Get my Daily Market forecast with trade opportunities HERE: Vladimir’s Markets Forecast

Happy Trading Friends!

Advertisement

Click To Join Our Community Telegram Group