All Eyes on the ECB Meeting

Yesterday, the Euro witnessed a slight rebound. The question is: Could it be a short term corrective move or has it taken a bullish path?

The reason behind such bullish movement could be due to data released from the US, which unleashed a profit taking wave. The figures pushed the traders to short sell the USD to gain profits.

Other reports released earlier showed a slash in predicted figures by the ECB, whereby the predicted growth of the European Union was revised downward from 1.7% to 1.1% and inflation from 1.2% to 0.8% in the next year.

The ECB meeting expected to be held tomorrow doesn’t seem to hold anything new. ECB’s president, Mario Draghi is expected to mention the monetary policy, and the continuation of the stimulation plan. However, he might also refer to the recent good economic data released from Europe, which might strengthen the EUR/USD.

Here are the major Resistance (R) & Support (S) levels of the EUR/USD:

S2
S1
Pivot Point
R1
R2
1.2465
1.2521
1.2560
1.2606
1.2655








As for today’s figures, starting from Europe, the Services Purchasing Managers' Index (PMI) will be released, measuring the activity level of purchasing managers in the services sector.

A reading above 50 indicates expansion in the sector; a reading below 50 indicates contraction. Traders watch these surveys closely as the purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of the overall economic performance.

Ø Forecast: 58.5
Ø Previous: 58.7

A higher than expected reading should be taken as positive for the GBP, while a lower than expected reading should be taken as negative for the GBP.





Moving to the US, high impact data will be released today. Starting with the ADP National Employment Report, which measures the monthly change in non-farm private employment, based on the payroll data of approximately 400,000 US business clients.

The release, two days ahead of government data, is a good predictor of the government's non-farm payroll report. Any changes in this indicator can cause high volatility in the market.

Ø Forecast: 220K
Ø Previous: 213K

A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.

From the US, as well, the Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers' Index (PMI) (also known as the ISM Services PMI) Report on Business is scheduled for release; based on data compiled from monthly replies to questions asked to more than 370 purchasing and supply executives in over 62 different industries, representing nine divisions from the Standard Industrial Classification (SIC) categories. It’s a composite index classified as an indicator of the overall economic condition for the non-manufacturing sector.

The NMI index will be released today. It’s a composite index also, based on the diffusion indexes for four of the indicators with equal weights: Business Activity, New Orders and Employment which are seasonally adjusted, and Supplier Deliveries.

A reading above 50 percent indicates that the non-manufacturing sector economy is generally expanding; however, a reading below 50 percent indicates that the non-manufacturing sector is generally contracting.






The membership of the Business Survey Committee is diversified by SIC category and based on each industry contribution to Gross Domestic Product (GDP).
Ø Forecast: 58.0
Ø Previous: 58.6

A higher than expected reading should be taken as positive for the USD, while a lower than expected reading should be taken as negative for the USD.

As for the energy market, the Energy Information Administration's (EIA) Crude Oil Inventories announcement will be released, measuring the weekly change in the number of barrels of commercial crude oil held by the US firms.

The level of inventories affects the price of the petroleum products, which can have an impact on inflation.

Ø Forecast: 1.900M
Ø Previous: 2.061M



Disclaimer: Forex trading is not suitable for everyone, as it contains a high risk of losing your entire investment. This article shall not be handled as a recommendation as it’s to assist our readers in better understanding the market movements.