EUR/USD Volatility

The euro started the week strong as the ForexSignal trading team sent a signal to buy the EURUSD at 1.1476 on July 17th. The pair reached all three of its take/profit targets on July 18th and ran out of steam as the greenback edged higher against the Euro on Wednesday.

The volumes traded were low, with most of the decline taking place during the first half of the day, despite a scanty macro economic calendar. The USD maintained a soft tone, down against the rest of its major rivals, even though the US housing data came out better than expected: the data showed that housing stats rose at its fastest pace in four months, up in June by 8.3% or 1.215 million. Housing wasn’t the only one that overachieved, building permits also beat expectations, up by 7.4% or 1.254 million.

The pullback was expected as speculative interest chose to lock gains ahead of the ECB’s monetary policy meeting that took place today.

ECB’s Monetary Policy

Analysts expected the European Central Bank to largely leave its monetary policy unchanged but to maintain the optimistic stance offered in the previous meeting. As expected, the ECB did just that and the single currency initially reacted by slipping against the greenback and yen. Any losses were reversed, however during ECB President Mario Draghi’s press conference as Draghi indicated a timeline for policy makers and promised that if needed, there would be additional stimulus. The euro jumped over 160 pips today as it reacted to the positive approach of the ECB.