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The acute liquidity needs in the economy

The acute liquidity needs in the economy | 17 July 2020

17 July 2020, EUR/USD

The acute liquidity needs in the economy

EURUSD trading plan:

The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics. Net purchases under the asset purchase programme will continue at a monthly pace of €20 billion, together with the purchases under the additional €120 billion temporary envelope until the end of the year. Turning to the monetary analysis, broad money growth increased to 8.9% in May 2020, from 8.2% in April. Strong money growth reflects bank credit creation, which continues to be driven to a large extent by the acute liquidity needs in the economy. This is a negative signal for the euro.

Trading recommendation: Sell 1.1420 and take profit 1.1380.

David Johnson
Analyst of «FreshForex» company
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