Euro gains ahead of ECB decision and eurogroup meeting
The euro rose against peer currencies as traders reflected on the upcoming inflation data, ECB interest rate decision, and EU presidents meeting. Analysts polled by Reuters expect that the ECB will leave rates unchanged this week and possibly save any big announcement for their September or October meeting. The biggest challenge for Europe is about the €750 billion recovery fund that was endorsed in May. The challenge is that countries like the Netherlands, Austria, Denmark, and Sweden, have opposed the structure of the fund. Instead of giving out grants to EU members, the countries have advocated for low-interest loans. Countries like Germany, Italy, France, and Spain have rejected that idea.
Global stocks rallied today as traders refocused on the second-quarter earnings season. In Europe, all indices were in the green, with the DAX and FTSE gaining more than 1%. In the United States, futures tied to the Dow Jones and S&P 500 rose by almost 1%. In its report today, Pepsi said that its earnings came in at $1.32 per share, 7 cents above what analysts were expecting. The company attributed this increase to its snack business. Tomorrow, we will receive earnings from Wall Street banks like JP Morgan and Wells Fargo.
The price of crude oil wavered today as traders waited for the important OPEC+ meeting that will happen on Wednesday. According to the Wall Street Journal, Saudi Arabia, the de facto leader of OPEC, is pushing for other members to gradually increase production. The leaders aim to boost daily production by about 2.2 million barrels. This report came two days after IEA said that crude oil demand has started to rise as more countries reopen. Also, another report by Baker Hughes showed that American producers had slashed active rigs to just 180, a significant low compared to January’s 600.
The EUR/USD pair rose to an intraday high of 1.1332 today. The price is above the 50-day and 100-day EMAs. It is also above the ascending trend line shown in white and the 23.6% Fibonacci retracement level. It is also slightly below last week’s high of 1.1371. Therefore, the price is likely to continue rising as the number of coronavirus cases continues to rise in the US.
The XBR/USD pair is relatively unchanged today as traders await the important OPEC+ meeting. The pair is trading at 42.88, which is slightly below the important high of 43.65. On the four-hour chart, the price is above the 100-day EMA and along the 50-day EMA. The volatility, as measured by the Average True Range (ATR) has declined sharply while the signal line of the MACD dropped below the neutral line. Therefore, the pair is likely to see some increased volatility in the coming days.
The XAU/USD pair rose to an intraday high of 1,807, which is slightly below last week’s high of 1,818. On the four-hour chart, the price is above the short and medium-term moving averages while the RSI has moved to 57. The pair may continue rising as bulls attempt to move above last week’s high of 1,807.