The currencies markets are waiting ahead for the release of US Labor report of July which is expected to show improving of the US non-farm payrolls jobs to 100k from 80k in June by God's will as there was no significant change of the market sentiment as both of the Fed and ECB have managed to keep everything unchanged anyway.
The Fed has seen as expected that there can be time to wait following June action of extending its treasuries twist operations by 267$ keeping its same buying monthly scale at $44.4b till the end of this year by God's will with no new negative non-farm payrolls figures may be until now!
While the ECB looked confused and waiting for political agreement to move in the EU bonds market lowering controlling the cost of borrowing while the political agreement is still looking unreachable with germane objection of such an action. The ECB looked weaker than expected to the market after Mr. Draghi's hawkish comments a weak earlier which have shown the ECB will do whatever is needed to preserve the euro zone but it seems that this flexibility and freedom of doing does not exist until now to undertake outright open-market operations of a size adequate to reach its objective as he mentioned.
So, it looks as expected that the ECB prefers waiting to work through the ESM as a way of injecting funds while it is still in need for more European working to come out while it is still not yet unknown whether it will have banking license or not than taking the responsibility of taking an action now buying bonds directly and in the same time, the ECB did not want to limit his job and power saying this clearly now. So, the waiting stance overcame again.
The meeting has disappointed surely for who was looking for new action clarify Mr. Draghi's hawkish comments a weak ago sending the single currency up in the beginning but with this confusion and mysteriousness the pressure came back on it again across the broad and god willing, The single currency can meet now in the case of rising again resistance at 1.2402 which could hold again this week and the breaking of it can be followed by 1.2443 before 1.2693 and 1.2748 which has been reached after the recent parliament elections in Greece again earlier last June while easing back again can bet met with supporting level at 1.2134 before 1.2042 which could stave off the pair falling last week and in the case of falling below it, this can open the way for testing 1.20 psychological level which can be followed by reaching 1.1876 again whereas the pair has rebounded forming its bottom on 7th of June 2010 while the market is waiting now by God's will for July EU PMI service sector in July to be as the flash reading at 47.6 from 47.1 in June after EU manufacturing PMI of July came at a lower level again reaching 44 from 45.1 in June earlier this week showing needed distance for stimulation by the ECB.
FX Market Strategist
Walid Salah El Din