Eur/usd - page 407
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ECB Preview: Deposit Rate Cut Seen Shunting Euro Higher The European Central Bank (ECB) is seen expanding its monetary stimulus this Thursday, giving the existing asset purchasing program a further boost after it prolonged the program till March 2017 back in December last year.
The decision of the ECB to expand the current asset purchasing program would be in line with its extra dovish rhetoric of late, as the Bank struggles to meet its inflation target of close to, but not exceeding 2%.
"It will therefore be necessary to review and possibly reconsider our monetary policy stance at our next meeting in early March, when the new staff macroeconomic projections become available which will also cover the year 2018," ECB President Mario Draghi said in the introductory statement after January ECB Governing Council meeting in Frankfurt.
The general consensus is that the ECB will cut the deposit rate further into negative. What else the ECB will deliver is an open question, with the Bank unlikely to build up any kind of market expectations after the blow back in December which hammered the credibility of both the ECB and Draghi and sent the euro jumping more than 400 pips higher against the US dollar.
A repeat this time round would more than likely send the euro higher, stifling any hopes for inflation or a boost to export competitiveness.
After ramping up expectations, delivering only a partial package would only be surpassed by actually doing nothing. That, however, is unlikely to be the case this Thursday, even though currency traders buying euros might desire that scenario, as the last action which fell well short of expectations back in December resulted in the eighth strongest intra-day gain for the euro in its 16-year history.
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The 1.2000 resistance level blocked the EUR/USD raising after the chain of the supportive news for the EUR against the US dollar, It was impressive gain in the last 4 hours.
ECB decision today spiked the EUR/USD to reach highest level in 1 month now resistance level 1.1210 is not going to be hard to break then next level is the highest price in 2016.
The euro registered a significant increase against the dollar on Thursday. The single currency has advanced considerably shortly after the meeting of the European Central Bank. So losses from beginning of the week were completely wiped out, and the two resistances at 1.1066 and 1.1119 were pierced. If the bullish trend continues, the pair will reach the key level at 1.1244.
The EUR/USD is trading higher since yesterday's press conference. The pair reacted sharply bearish in the initial moments and reached 1.0820. However, the Euro decided it's time to break the resistance and pierced through the 200SMA at 1.1045 reaching as high as 1.1218.
Currently a modest decline is taking place and the EUR/USD is trading at 1.1120. Strong support at 1.1080. Major target for bulls 1.1400.
Yesterday EURUSD initially fell 177 pips but found enough buying pressure at 1.0819 daily support to turn around and close near the high of the day, in addition managed to close above the previous day high, suggesting a strong bullish momentum.
The pair closed above the 10, 50 and the 200-day moving averages -day moving averages that are acting as dynamic support.
Due to the 183 pips extent move the market might retrace back to 1.1097 daily support before another leg up.
The key levels to watch are: The year high at 1.1376 (resistance), a daily resistance at 1.1236, daily support at 1.1097, the 200-day moving average at 1.1024 (resistance), 50-day moving average at 1.1012 (resistance) and the 10-day moving average at 1.0999 (support).
The single currency hit low against the dollar after the ECB announcement. Subsequently, however, the euro recovered positions and shoot up after ECB President Mario Draghi said he does not expect a need for new interest rate reduction in the future, but interjected that "this fact is subject to change."
Next levels to watch for:
Support: 1.0892; 1.0817;
Resistance: 1.1066; 1.1119; 1.1244;
EUR/USD most likely will enter the sideways trading for awhile after yesterday's spike.
The EUR/USD tested the resistance at 1.1213 for the second day this week, It seems the pair won't cross over it this week.