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Euro and Pound Move in Opposite Directions before the ECB Meeting

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Euro trading flat, pound posts strong gains

The pound-US dollar currency pair posted the highest gains among the European currencies. It rose by 0.76% on July 20, 2016. The euro-US dollar pair was trading range bound around the 1.10 handle. The pair ended the day on a flat note with a slight fall of 0.06%. The euro will be the focus on July 21 when the ECB (European Central Bank) meets to decide on the monetary policy. The currency movements are suggesting uncertainty in the traders, but markets are widely expecting the ECB to keep the rates unchanged.

Any strong dovish statements from the ECB could see the euro test 1.09 levels.

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New Zealand dollar fell

The New Zealand dollar-US dollar currency pair has been on a losing trend over the last two days. The pair fell over 1.3% since July 19, while it fell close to 0.35% on July 20. Currently, the currency pair is testing 0.70 resistance levels. The fall in the New Zealand dollar has been primarily attributed to the Reserve Bank of New Zealand mentioning in its economic update that there’s a need for more easing. Markets are forecasting the easing to happen as early as August. There could be more easing in November.

Impact on the currency ETFs

US dollar–based ETFs were trading on a flat note on July 20. The WisdomTree Bloomberg US Dollar Bullish ETF (USDU) and the PowerShares DB US Dollar Bullish ETF (UUP) rose by 0.19% and 0.08%, respectively. The Guggenheim CurrencyShares Canadian Dollar ETF (FXC) fell by 0.21%.

The Guggenheim CurrencyShares Japanese Yen ETF (FXY) fell by 0.81% on July 20. The Guggenheim CurrencyShares Euro ETF (FXE) had a slight rise of 0.02%.

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