2016-07-21 11:17:44

US macro-economic data continues to be positive, while economic growth in the Eurozone has slowed down. ZEW index of business expectations in Eurozone for July released on Wednesday was at the level of -14.7, which is the lowest level since November 2012. Economic sentiment index in Germany for July was 6.8 against 19.2 in June, index of current conditions in Germany for July was 49.8 vs. 54.5 in June. President of the Institute ZEW said the main reason for deterioration in sentiment is the uncertainty caused by Brexit.

According to ECB data, export surplus in Eurozone fell to 30.8 billion euro (34.0 billion USD). In April export surplus was 36.4 billion euro. Economic prospects for the Eurozone have significantly deteriorated. Now, when the risks for the Eurozone economy are significantly increasing, market participants expect that quantitative easing program will be expanded.

Today (13:45 GMT+2) interest rate decision by the ECB will be known. Later, at 14:30 GMT+2 press conference of the ECB will be held. Previously decisions and comments by the European Central Bank could change the price of Euro by 5% in the short-term. Today's meeting will be the first after the UK referendum.

Earlier, Mario Draghi suggested to be patient and wait for the positive results from the extra soft policy of the ECB, however, now economic situation in Eurozone has deteriorated. Last month, Mario Draghi stated that as a result of Brexit, GDP growth in Eurozone would decrease by 0.5% in the next three years.

At the same time, chances that the US Fed will increase interest rate in September are increasing due to the positive US economic data. Futures for the US Fed interest rates indicate 25% probability of a rate hike in September. Probability of the rate hike in December is 43%. Increasing expectations of the interest rate hike in the USA before the end of the year triggers the rise in the USD in the market.

Fundamental factors are in favor of the decline in the pair EUR/USD in the medium-term.

However, comments by Mario Draghi, ECB President, can cause high volatility in the currency market, the pair EUR/USD can sharply move to either direction, which shall be considered when making trading decisions today.

EUR/USD: Today’s important events. Fundamental analysis for 21.07.2016.