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Market Awaiting ECB Interest Rate Decision

9/8/2022 2:00 PM

The EUR/USD pair is trading around 0.9990, trying to regain its position after the publication of positive macroeconomic statistics.

Thus, the Q2 EU economy increased by 0.8%, which exceeded the forecasted 0.6%: gross domestic product (GDP) growth amounted to 4.1% YoY compared to 5.4% in the previous period. Nevertheless, it was higher than preliminary estimates of 3.9%, allowing the European Central Bank to continue tightening monetary policy parameters without fear of a possible recession. At the moment, analysts expect an interest rate hike of 75.0 basis points from 0.50% to 1.25%, but this forecast was made without considering yesterday's GDP data, which means that the agency can act more aggressively by adjusting the value by 100.0 basis points.

The American currency did not stay at absolute highs for a long time, and by the end of yesterday's trading fell below 110.000 in the USD Index and is now trading around 109.700. The main reason for the negative dynamics of the asset was the disappointment of investors in mortgage interest rates: the indicator almost reached an absolute maximum of 6%, amounting to 5.94%, and against this background, demand for mortgages in the United States fell to a minimum in 22 years. The index of the number of mortgage applications fell to 258.1 points from 705.6 points at the beginning of the year, and the downward trend continues.

The trading instrument is moving toward the support line within the global downward channel. Technical indicators keep a stable sell signal: fast EMAs on the Alligator indicator are below the signal line, and the AO oscillator histogram forms downward bars in the sell zone.

Resistance levels: 1.0070, 1.0370. | Support levels: 0.9862, 0.9650.

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