Yesterday the euro followed actively the news. Retail Sales in Germany in June fell 1.5% vs. forecast for a 0.1% growth. The Unemployment rate in the Eurozone stayed at the level of 12.1% vs. expectations for rise up to 12.2%; the euro rose 35 points. ADP Non-Farm Payrolls in July was up 200K vs. expectations for 179K; Figures from June were revised upwardly, for 10K. US GDP in the second quarter grew 1.7%, vs. forecast for 1.1%; the euro fell 85 points. Before FOMC Interest rate Announcement and after it the euro jumped 120 points and closed the day with a 40-point increase. The summary of the meeting may be described by Jon Hilsenrath from WSJ, who said the Fed preserved the bond-buying program in action and mitigated the intonation about the growth outlook. Strictly speaking it was expected from the Fed and considerable euro fluctuations were forced only by speculations of major investors. We consider that change in QE3 is closely connected with expected cancellation of sequestration and the other increase of governmental debt limit, and thus the Fed was neutral.
In August, White House plans to achieve the cancellation of budget sequestration. Even the IMF expressed the opinion that cut of the expenses was taken mistakenly. We suppose this time the cancellation of sequestration will be adopted (after the hardest pressure for the Congress) as compensation for QE3 cut. In fact, the Fed cannot endlessly buy on its own balance the budget deficit. Thus, until September 18, the markets may be calm. In the beginning of September, White House and Congress start discussing the possibility to increase the limit of national debt, which is a strong positive factor. We expect the euro drops until the cancellation of sequestration. In the second ten-day period of September when the decision about Qe3 cut is announced, the euro, of course slows down but it will resume its growth in the future.
At 15:45 UTC+4 the ECB press conference. It is expected to be the same, 0.5%. However, there were rumors that the ECB may slash the rate. That is why according the US media, positions on the stock market closed (Dow Jones -0.13%). At 16:30 UTC+4 the ECB press conference is scheduled.
From the technical point of view, our expanding triangle on the H4 is executed and after the price consolidated under the signal level 1.3296, the price moves to the second signal level 1.3238. If the rate consolidates under it, it is the sign the pair is ready to take price levels placed lower.
