Euro breaks higher as ECB announce new targeted refinancing operation

ECB support

The euro currency advanced to a six-week trading high against the US dollar this week after the European Central Bank announced TLTRO three and upgraded EU growth projections for 2019. The ECB finally offered Europe’s struggling financial institutions a lifeline as they announced the Targeted Long-Term Refinancing Operation for a third time, which essentially offers cheap loans to banks inside the EU. The ECB also upgraded its GDP forecasts for 2019, but downgraded its forecasts for 2020 and 2021. The EURUSD pair received a boost on the news and traded towards the 1.1300 level after the ECB press conference, where outgoing ECB President Mario Draghi struck a balanced tone towards the EU economy.

∙ The EURUSD pair is only bearish while trading below the 1.1200 level, key support is found at the 1.1165 and 1.1110 levels.

∙ If the EURUSD pair trades above the 1.1200 level, buyers may test towards the 1.1320 and 1.1410 resistance levels.

FED rate cut

The US dollar index fell sharply lower this week as the chances of the US Federal Reserve cutting interest rates this year increased dramatically, following the release of more soft United States economic data. The US economy posted its weakest ADP Private Sector jobs report in nine years while the ISM manufacturing report also fell well short of economists forecasts. Traders increased bets that the Federal Reserve may be forced to cut interest rates as the American economy begins to slow down. The US dollar suffered its worst losses against the Candian dollar and Singapore dollar, as investors adjusted US dollar holdings.

∙ The USDCAD pair is bearish while trading below the 1.3380 level, key support is found at the 1.3310 and 1.3260 levels.

∙ If the USDCAD pair trades above the 1.3380 level, key resistance is found at the 1.3465 and 1.3550 levels.

Cryptocurrency weakness

The cryptocurrency market started the new trading week and month on softer-footing, as crypto sellers erased over $20 billion in market capitalization from the digital currency market. Bitcoin slipped towards the $7,400 support level after failing to overcome the $8,500 resistance level as the overall market mood turned bearish. Ethereum failed to make gains above the $260.00 level, while Litecoin briefly dipped back under the $100.00 level. Profit taking was blamed on the move lower this week, while Bitcoin is also known to underperform during the summer months.

∙ The BTCUSD pair is bullish while trading above the $8,000 level, key resistance is found at the $9,000 and $10,000 levels.

∙ If the BTCUSD pair trades below the $8,000 level, key support is located at the $7,800 and $7,500 levels.

RBA Act

The Reserve Bank of Australia cut interest rates by 0.25 percent this week as widely expected, with the central bank leaving the door open for further rate cuts if the domestic economy worsens. Market participants had hoped that the RBA would act in order to stabilize the worsening unemployment, inflationary and housing environment inside the domestic economy. The Australian dollar moved higher against the US dollar as an interest rate cut was already largely priced into the the exchange trade by traders and investors. The Australian dollar also benefitted from broad-based weakness in the greenback, with the AUDUSD briefly moving above the 0.7000 level.

∙ The AUDUSD pair is bullish while trading above the 0.6980 level, key resistance is found at the 0.7020 and 0.7080 levels.

∙ If the AUDUSD pair trades below the 0.6980 level, sellers may test towards the 0.6950 and 0.6910 support levels.