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Euro Reverses Following PBOC Interest Rate Cut
The EUR/USD dropped in early North American trading following news that the Chinese central bank reduce their benchmark interest rate. Stock futures soared and oil prices moved higher as the PBOC rushed in to stabilize their stock and currency markets.
Chinese official slashed their benchmark lending rate for the fifth time since November and lowered bank reserve requirements. The move by the Peoples Bank of China is another in their efforts to cushion a stock market rout and deepening economic slowdown. The one-year lending rate will drop by 25 basis points to 4.6 percent effective Wednesday, according to the PBOC. The one-year deposit rate will fall by 25 basis points to 1.75 percent.
The EUR/USD is creating an inside day following the surge in the currency pair on Monday. The exchange rate broke out above trend line resistance at 1.1320, which is now seen as support. Additional support on the currency pair is seen near the 10-day moving average at 1.1230. Momentum remains positive with the MACD (moving average convergence divergence) index printing in positive territory with an upward sloping trajectory. Resistance on the currency pair is seen near the December 2015 highs at 1.2570.
The post Euro Reverses Following PBOC Interest Rate Cut appeared first on Forex Circles.
