FX.co ★ Euro growth has stopped

The results of the ECB meeting on monetary policy convinced investors that the bank will not take any effective measures until the outcome of the election of the German Chancellor, who is a key figure in the policy and economy of the eurozone.

The European regulator did not do anything new, interest rates were left at the previous levels but the bank's resolution expressed concern about the high volatility of exchange rates. However, without specificity on the bank's own action regarding the strong growth of the euro. In his comments, ECB President M. Draghi was positive about the growth of the European economy, but indicated that he does not expect a noticeable increase in inflation. He also did not comment on the situation with the strong appreciation of the euro in the currency markets.

Markets, assessing the resolution of the bank following the meeting, as well as the tone of Draghi's speech, concluded that the euro is not worried about it yet. And important decisions on the fate of incentive measures will be decided after the Fed's October elections, so we can expect that the single currency will consolidate against the major currencies. But with respect to the dollar, the increase may continue if the next statistics from the US, as well as the results of a two-day meeting of the Fed will show the regulator's refusal to raise rates before the end of this year.

If you pay attention to the dynamics of the US dollar, then most likely, it will remain under pressure before the Fed meeting. A significant drop in it may continue in relation to the Japanese yen, which is growing despite the release of weak GDP data for the second quarter. The main reasons for the strengthening of the yen are the factors of geopolitics and the chronic weakness of the US dollar, which is sold on the wave of political confrontation in Washington and the expectations of the growth of government spending on the liquidation of the consequences of hurricanes.

Forecast of the day:

The EUR/USD pair may adjust to 1.1980 after rising yesterday on the background of local overbought in anticipation of new data on statistics on the US economy on the eve of the two-day meeting of the Fed, which will be held on September 19-20.

The pair USD/JPY has the potential to continue falling on the wave of geopolitical risks that have not gone anywhere, as well as the weakness of the US dollar. Based on this, it can be assumed that the pair will fall to 107.00, but only after a decline below the mark of 107.55.