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EUR/USD Keeps Gains After ECB Monetary Policy Announcement

January 21, 2021 by

EUR/USD was rising today and continued to move higher after the European Central Bank announced its monetary policy decision (event A on the chart), though the currency pair was moving in a range following comments of ECB President Christine Lagarde at the press conference after the decision (event B on the chart). Markets considered the speech positive for the euro as Lagarde said that the downside risks are “less pronounced” and did not comment about the strength of the euro. As for today’s US macroeconomic reports, all of them beat expectations but that did not help the dollar.

Philadelphia Fed manufacturing index jumped from a revised reading of 9.1 in December to 26.5 in January. That is compared with the median forecast of 11.2. (Event B on the chart.)

Initial jobless claims dropped to 900k last week, seasonally adjusted, from the previous week’s revised level of 926k (965k before the revision). The consensus forecast had promised a reading of 930k. (Event B on the chart.)

Both housing starts and building permits rose in December. Housing starts were at a seasonally adjusted annual rate of 1.67 million, up from the upwardly revised December reading of 1.58 million. Building permits were at a seasonally adjusted annual rate of 1.71 million, up from 1.64 million in the previous month. That is compared with the median forecast of 1.56 million for housing starts and 1.60 million for building permits respectively. (Event B on the chart.)

On Tuesday, a report on net foreign purchases was released, showing a reading of $149.2 billion in November. That is compared to $45.5 billion predicted by analysts and $51.9 billion registered in the prior month. (Not shown on the chart.)

If you have any comments on the recent EUR/USD action, please reply using the form below.

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