EURUSD, H1
Eurozone Sentix investor confidence fell back in February. The headline number remained positive at 5.2, but the drop from 7.6 in January marked the first setback since October last year, which highlights that the relief over the clearer political situation in the UK and the signing of the phase-one trade deal between China and the US has been dented. The coronavirus outbreak clearly plays a role, but it is also likely that investors have realised that the signing of the Withdrawal Agreement in the UK still doesn’t secure a trade deal further down the line. The breakdown for the Sentix index showed that both the assessment of the current situation as well as the expectations reading fell back in February.
Earlier, Luis de Guindos, the ECB’s vice president, told Spanish newspaper Expansion that the ECB hasn’t reached the reversal rate and still has tools to support the economy if needed, including cutting interest rates further alongside debt purchases. Still, while the comments confirm that the ECB has an easing bias and is ready to step in should the fallout from the coronavirus outbreak force the ECB to change its central scenario for the economy, Guindos also stressed again that the side effects of the very accommodative policy are becoming more evident. Guindos added to the growing number of voices calling for other policies to support monetary policy which means fiscal authorities should step up their efforts to promote growth and investment. All of which is very much in line with the tone his boss (Ms Lagarde) took last week. Markets await any news surrounding the direction of the Strategy Review.
EURUSD dipped to 1.0944 from the daily pivot point at 1.0957 and clings to the 20-hour moving average. S1 sits at 1.0930 with the upper Bollinger band and 50-hour moving average converging at 1.0965 below R1 at 1.0972. EURGBP turned down from 0.8500, through R1, to test the daily pivot point at 0.8475, while the 200-hour moving average and lower Bollinger band converge at 0.8470.
Click here to access the Economic Calendar
Stuart Cowell
Head Market Analyst
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
