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On Thursday, the European single currency experienced a real shock, which was caused by the statement by the representative of the ECB, head of the Central Bank of Finland O. Rehn. He in his speech actually announced a new stimulus program from the European regulator, which will provide for a reduction in Deposit interest rates to minus 0.5% from the current value to minus 0.4% and buying government bonds worth 50 billion euros per month. Perhaps these values will vary, the important thing is that Rene said that the incentives should disappoint the market. "It is better to exceed expectations than not to justify," said O. Ren.
In this situation the question arises that what will happen in the future with the main currency pair EUR / USD. Will she return to parity?
Indeed, the expected new unprecedented measures to support the European economy, the risk of stalling it into a recession were a catalyst for the continuing fall of the Euro on foreign exchange markets against the U.S. dollar. But whether this drop is effective against the "American" is hard to say. The problem is that the fed in the face of a looming chaos on financial markets, the signals about the risks the beginning of the recession in the United States amid escalating trade war between Washington and Beijing is unlikely to stand still. Although among members of the American regulator while there is no consensus whether to continue continue to lower interest rates again or take a break and watch the situation, the likelihood that at the September meeting may be decided on the drop rates, is very high.
So, in our opinion, during this period of uncertainty actions of the Federal reserve about the prospects level of interest rates, the pair EUR / USD will have every chance to continue falling. As it would be deep, now fully depends on future actions of the fed and not the ECB's plans which, in General, already announced.
As for the prospects for parity in the major currency pair, then we do not see for this reason. But this possibility can fully exclude the achievement of a trade agreement between the US and China. In this case, the fed may not consider the possibility of lower interest rates, which would entail an even stronger fall. And then, if this situation continues, there is a possibility of approximation of the pair to the 1.0000 mark.
the Forecast of the day:
the Pair EURUSD is trading above the level of 1.1100. It can recover to 1.1135. We consider possible sales growth, approximately, from this level or after it is stalling below the level of 1.1100 with the overall goal of 1.1025.
the USDCAD is testing the 1.3300 level. If the crude oil prices will start recovering in the Wake of expectations of a new telephone conversation between D. trump and si Czeniem, the price fixing below this level may lead to a local reduction of the pair to 1.3200.
the Material has been provided by InstaForex company - www.instaforex.com
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