The ECB held its monetary policy meeting on Thursday, July 22, at which no breakthroughs were achieved. In line with the regulator’s decision, rates will remain at the current or lower level until at least next spring. Furthermore, QE will not be wound down until Eurozone inflation ‘durably’ reaches the regulator’s 2% target.
The single currency showed a jittery reaction to the ECB’s dovish narrative, but not for long. It breached the upper bound of the active (blue) downtrend and reached 1.1830. But the pair did not stay at this level, and quickly plunged to 1.1757. Thus, the key pair remained within the medium-term descending channel, shifting only marginally (the current channel is red).
EURUSD has been trending higher on Friday morning, exceeding the 1.1780 mark. The pair is drawing support from strong, higher than expected July Markit PMIs out of both Germany and for the Eurozone. That said, as long as the euro/dollar pair continues to trade within the descending channel, the gains could reverse at any time to losses in the vicinity of 1.1751.