Euro rallies as the ECB boost QE by €600 billion

The British pound declined today as investors reacted to the weaker construction PMI data from the UK. According to Markit, the PMI rose to 28.9 from the previous 8.2. While that was a big improvement, it was below the 29.7 that analysts were expecting. In the report, Markit said that the construction sector remained under pressure as more people remained at home. The market also reacted to the devastating auto sales. Data from the auto association showed that auto registrations declined by 89% in May after dropping by 97.3% in the previous month. 

The Australian dollar declined slightly against the US dollar even after the statistics office released better-than-expected retail sales data. The numbers showed that retail sales dropped by more than 17.7% in April after rising by 8.5% in March. According to the bureau of statistics, the decline was mostly because of the weak spending in hotels and entertainment spots as people stayed at home. Other areas that lagged were household spending and clothing. In the same month, the country’s exports declined by 11% while imports fell by 10%.

The euro rose against the US dollar after ECB delivered its interest rate decision. As was widely expected, the bank made no notable changes to its monetary policy. It left interest rates unchanged and said that it will add 600 billion euros to its quantitative easing program. Meanwhile, in the United States, data from the Labour Department showed that initial jobless claims rose by 1.8 million in the previous week. That was lower than the previous week’s 2.1 million claims. These numbers came a day ahead of the May nonfarm payroll numbers. Analysts expect the unemployment rate to rise to almost 20% and the NFP to drop by more than 8 million points.

AUD/USD

The AUD/USD pair is trading at 0.6892, which is lower than the YTD high of 0.6981. On the four-hour chart, the price appears to be forming a bullish pennant pattern, which is shown in white below. Also, it is in an overall upward trend and above the 100-day and 50-day exponential moving averages. Therefore, the pair may resume the upward trend as the bulls approach the 0.7000 level. On the flip side, a move below 0.6750 will invalidate this view because it will send a signal that there are more sellers in the market.

GBP/USD

The GBP/USD pair declined today after the weak construction and car sales from the UK. The pair is trading at 1.2534, which is slightly higher than the intraday low of 1.2500. The price is above the 23.6% Fibonacci retracement on the hourly chart. The price is above the 100-day exponential moving average and slightly below the 50-day EMA. Also, the RSI has moved from the oversold low of 30 and is now at 44. The pair will likely continue moving lower as bears attempt to move below the 23.6% retracement level at 1.2484.

EUR/USD

The EUR/USD pair rose after the ECB delivered its interest rates decision. It is trading at 1.1250, which is the highest it has been since March this year. The price is above the 50-day and 100-day EMA while the RSI is slightly above the overbought level. The momentum indicator has also continued to rise, meaning that the pair will likely continue rallying.