- EUR / USD reversed its direction after climbing to the 1.1830 zone.
- The ECB left its policy setup unchanged as expected, revised its guidance.
- The USD regained strength during US trading hours.
After spending the first half of the day moving sideways in a tight range around 1.1800, the pair EUR/USD it gained traction and climbed to a daily high of 1.1831 before reversing its direction. At time of writing, the pair was shedding 0.25% on the day at 1.1763.
The new ECB guidance points to a moderate change in the outlook
As expected, the European Central Bank (ECB) left the interest rates of the main refinancing operations, the marginal credit facility and the deposit facility unchanged at 0.00%, 0.25% and the -0.50%, respectively. In its policy statement, the ECB revised its forward-looking guidance to indicate that it will allow for a temporary overshoot of inflation before taking policy action.
Commenting on the ECB’s policy statement and President Christine Lagarde’s comments, “Promises made, promises kept: European Central Bank President Christine Lagarde has made a moderate policy change, exceeding market expectations and challenging aggressive members, “said FXStreet analyst Yohay Elam. “That should keep the EUR / USD depressed, even if the dollar remains on the defensive.”
In addition to renewed EUR weakness, USD resistance caused EUR / USD to continue to push lower during the US session. With the major Wall Street indices scrambling to extend the two-day rally on Thursday, the US Dollar Index rose and was last seen posting small gains at 92.87.
US data revealed Thursday that initial jobless claims rose to 419,000 in the week ending July 17, compared with analysts’ estimate of 350,000.
On Friday, IHS Markit will release the preliminary manufacturing and services PMI for the euro area, Germany and the US.