Euro slides after Mario Draghi hinted at rate cuts and QE
Cryptocurrencies prices rose today after Facebook unveiled its own currency that it hopes will one day rival the US dollar. The currency, which will be called Libra, will be backed by other fiat currencies like the euro, US dollar and Japanese yen and will be launched next year. Being backed by the fiat currencies will help it avoid the volatility that is common with other cryptocurrencies like Bitcoin. The currency has received the backing of 27 companies like Mastercard, Visa and Uber.
The euro declined sharply after ECB president, Mario Draghi hinted at rate cuts or further quantitative easing unless inflation in the EU picks up. That seems unlikely in the face of synchronized global economic easing. The data released today confirmed that. The headline CPI declined from 1.7% to 1.2% while the core CPI declined from 1.2% to 0.8%. On a MoM basis, the core CPI declined by -0.1% while the headline CPI declined from 0.7% to 0.1%.
The USD was relatively unchanged ahead of the Fed interest rates decision tomorrow. The Fed committee members will start meeting today. Investors expect officials to leave rates unchanged and release a relatively dovish statement. Ahead of the decision, the US released building permits and housing starts data. In May, the housing starts came in at 1.269 million. This was a -0.9% decline from the previous 1.281 million. The building permits rose by 0.3% from 1.290 million to 1.294 million.
The BTC/USD pair continued the upward momentum after Facebook launched its own stablecoin. The pair reached a high of 9500, which is the highest level this year. On the four-hour chart, the price is above the 25-day and 50-day moving averages. The RSI is above the overbought level of 70 while the accumulation/distribution indicator has been on an upward trend. The momentum indicator continues to remain above the 100 mark. There is a likelihood that the pair will continue moving higher as enthusiasm in cryptocurrencies continues.
The EUR/GBP pair declined sharply today after the dovish statement from Mario Draghi. The pair is now trading at the 0.8930 level, which is slightly higher than the intraday low of 0.8920. On the hourly chart below, this price is along the 25-day moving average and slightly higher than the 50-day EMA. The RSI has moved from the overbought level of 85 to the current level of 40. The signal line of the Stochastics indicator has moved up slightly from the oversold level. The pair is likely to resume the upward trend as the dovish stance by the ECB has been priced in.
The EUR/USD pair declined today after the dovish statement by Mario Draghi. The pair reached a low of 1.1180, which was the lowest level since June 3. On the hourly chart, the pair is trading below the 50-day and 25-day moving averages and along the 38.2% Fibonacci Retracement level. The signal line of the MACD has moved lower. The pair will likely consolidate along these levels as traders wait for the Fed decision tomorrow.