Today’s Spotlight Market
The European Central Bank decided to wait for more data to better assess economic conditions after the shock of the United Kingdom voting to leave the European Union. The ECB decided to make no changes to monetary policy at their most recent meeting on July 21. Interest rates remain at 0% while banks are charged a negative interest rate of 0.4% on excess reserves left in the ECB?s vaults. Quantitative easing remains at 80 billion Euros per month.
Fundamentals
This was not an unexpected decision from the ECB and is similar to the recent actions of the Monetary Policy Committee of the Bank of England. While the EU referendum was a shock, it will take time to ultimately determine what effect the uncertainty will have on European economies. Recent terrorist events and the attempted coup in Turkey could also influence economic growth in the region. The ECB is targeting inflation at 2%, but inflation for June came in at only 0.1%.
Technical Notes? -? View Today’s Chart
Turning to the 3 month continuation chart, we see mostly bearish indicators for the Euro.? The 20 day Simple Moving Average (SMA) which was previously providing support, is now a resistance level. The 20 day SMA is beneath the 50 day SMA and both are in downward trends. 14 day Relative Strength Index (RSI) is a bearish 38.70
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