FX.co ★ EUR/USD. The "passing" ECB meeting, uncertain growth of the dollar and Johnson's ultimatum

Traders predictably ignored the October meeting of the ECB. Although Mario Draghi voiced the dovish theses, his rhetoric did not impress market participants. This was the final speech of the chairman of the European central bank, so all his comments and suggestions were more likely to be recommendatory in nature.

Nevertheless, Draghi eloquently conveyed the general mood that is in the camp of the European Central Bank. ECB members are still determined to maintain a high degree of accommodation over a "long period of time," while they positively assess the impact of negative interest rates. But they assess the prospects for the European economy on the contrary, pessimistically: Mario Draghi reiterated his thesis that current macroeconomic reports suggest a "more pronounced" slowdown in economic growth, while downward risks only increase. Sluggish inflation also worries ECB members, especially in light of the September data: the general consumer price index was revised downward (to 0.8% from the previous 1%). In addition, according to Draghi, the growth dynamics of the manufacturing industry in the eurozone is of particular concern. This sector of the economy is the most vulnerable in the context of the negative effects of global trade conflicts.

In other words, the head of the ECB did not say anything new: he voiced all these theses before. At the same time, taking into account the fact of his final speech, he allowed himself to open the curtain of the "inner workings". According to him, members of the European regulator who previously voted "differently from the majority" resolved controversial issues and called for unity. Thus, Draghi, firstly, admitted that at the September meeting there was a split among the ECB members (some members of the regulator opposed the resumption of the stimulus program), and secondly, he announced the settlement of the conflict.

Thus, the October meeting of the European Central Bank was "passing". The euro-dollar pair quickly switched to other fundamental factors. By and large, today the EUR/USD pair followed the dynamics of the US currency, ignoring the ECB meeting. In turn, the dollar index jumped in a few hours from 97.105 to 97.515 points, even despite weak data on orders for durable goods.

The greenback rose in price due to another indicator: the index of business activity in the manufacturing sector for the first time in a long time came out in the green zone. For the first time in several weeks, the manufacturing sector was pleased with positive dynamics after a series of negative releases. The US manufacturing ISM index has been steadily decreasing for the past six months (in September it crashed to around 47.8 points, updating a 10-year low). Following the ISM, the producer price index also showed a significant decline - on a monthly basis, this indicator unexpectedly plunged into the negative area, for the first time since January of this year, showing the weakest result since the fall of 2015. The load of industrial capacities decreased, and the volume of industrial production (the indicator includes manufacturing, mining and utilities) decreased in September by 0.4% on a monthly basis. This is also a kind of anti-record - for the first time since April this year, this indicator fell into the negative area.

That is why the greenback reacted so violently to the growth of the US index of business activity in the manufacturing sector. Instead of falling to around 50.7, the indicator rose to 51.5. Frankly speaking, this is a rather modest and unconvincing reason for the growth of the dollar, however, against the background of the general pessimism that prevailed among dollar bulls, this information line triggered a rise in the price of the greenback throughout the market.

The European currency turned out to be vulnerable to the onslaught of the dollar: the dovish heses of the ECB coincided with the uncertain prospects of Brexit. Every day the situation is becoming more confused, while the "X-hour" - October 31 - is just around the corner. On the one hand, Brussels is ready to grant a reprieve to London, but cannot decide on the final date of extension. On the other hand, Johnson is still "playing his own game": according to the latest information, the head of the British government delivered an ultimatum to the deputies of the House of Commons: he gives deputies more time to discuss the deal (agreeing on a postponement), but only if they agree to hold early elections - December 12. At the same time, he called on the Laborites to support the elections by voting, which he plans to hold next week (but until October 31). Uncertainty on this issue puts background pressure on the euro.

Given the shaky and rather controversial reasons for the growth of the US currency, it can be assumed that the euro-dollar pair will completely switch to the Brexit theme tomorrow, and will essentially follow the pound. If traders again have hope for a deal before the end of this year, EUR/USD will test the resistance level 1.1190 (the upper line of the Bollinger Bands on the daily chart), which turned out to be "too tough" for the pair's bulls at the beginning of this week.