- ECB Stimulus Plan
- Weakening U.S Dollar
- German Unemployment Outlook
The EUR/USD pair continued edged higher in Wednesday trading session, on taking advantage of a weakened U.S dollar across the board. The pair touched three-month highs in early Wednesday trading session as traders reacted to an uptick in EU economic activity.
ECB Stimulus Plans
The European Central Bank swinging into action with a number of policies, has helped renewed traders’ interest in the single currency. A confirmation that the ECB is set to increase its 750 billion euro bond-buying program is the latest catalyst fueling the Euro’s strength.
The pair was back to three-month highs of $1.1200, taking advantage of a greenback that continues to weaken as riots continue to cause havoc in the U.S.
Reports that the ECB is poised to increase its Pandemic Emergency Purchase program by an additional 500 billion euros, continues to excite the markets. A good chunk of the money will go towards revitalizing the Eurozone economy that is reeling from the effects of the COVID-19 pandemic. Economic activity has already started picking pace as countries across the region continue to ease COVID-19 fueled lockdowns.
Looking ahead, traders’ focus will be on the ISM Non-Manufacturing data as well as factory orders in the U.S. The outcome of the economic release could have a significant impact on the dollar strength, consequently the direction of trade for the EUR/USD pair. The market expects a reading of about 44 slightly above 41 reported last month.
Traders will also shift attention to German unemployment change with expectations pegged at 195,000, an improvement from 375,000 reported in May. A much higher figure could lead to weakness in the Euro as it would signal the Germany economy is still struggling from the effects of the COVID-19 pandemic.