21.08.202010:44 Forex Analysis & Reviews: ECB to step up stimulus measures to maintain the pace of economic growth in the eurozone.

The euro held its positions yesterday, resisting to decline even amid major sell-offs that occurred due to rumors of a progress in the negotiations on a new aid package for the US economy.

A report from the ECB allowed the currency to hold at the price level of 1.1820, especially since the regulator signaled its readiness to take new measures to stimulate the eurozone economy. It will do so to solve the problems that the eurozone faces, namely the rising unemployment and the high threat of corporate bankruptcy. Any delay on these issues will lead to a strong blow to the already weak European economy, hence, the minutes of the last ECB meeting indicated that the volume of purchases in the PEPP program may be increased. In addition, ECB leaders agreed that if necessary, they will adjust other monetary policy instruments.

The next meeting of the ECB will be held on September 9-10.

Meanwhile in the United States, data on the US labor market was published, which turned out to be much worse than the forecasts. The report from the US Department of Labor indicated that new jobless claims rose last week, a testament to the rise in layoffs as the economy is gradually recovering from the pandemic. The lack of decisions to extend the unemployment assistance program and additional payments creates an additional threat to the unemployed and the economy.

Thus, according to the data, initial applications from August 9-15 increased by 135,000 and to 1.1 million. In addition, the risk of a shattering in the US labor market remains quite high, because many companies have already resumed their work, and the situation continues to deteriorate. Many Americans are still worried about the spread of the coronavirus, and this creates rather unfavorable conditions in the labor market.

A report on manufacturing activity in the Philadelphia Fed was also released yesterday, which indicated a slowdown in the growth of the indicator this August. Business activity fell to 17.2 points this month, lower than what economists expected which was 20.0 points.

Data from the Conference Board, meanwhile, pointed to increased activity even despite the spread of the coronavirus. According to the report, the index of leading indicators in July rose by 1.4% compared with June, reaching 104.4 points. Economists had expected the indicator to rise by 1.1%.

As for the technical picture of the EUR/USD pair, bulls need to protect the support level of 1.1820, as a breakout from which will only increase the pressure on the euro and push the EUR/USD even lower to the level of 1.1780. The target of the bears is the support level of 1.1710, so price will increase only if the bulls manage to regain the resistance level of 1.1890.