Euro tumbles below 1.24 after ECB

EUR/USD Europe held the pair to a tight 1.2495-1.2533 range ahead of the ECB & Draghi’s presser. As NY got going the pair sat 1.2520. The ECB left rates unchanged & little reaction was seen. Draghi’s presser pushed the euro down as he noted that the Bank was unanimous in its commitment to additional unconventional stimulus measures if needed. This negated a story earlier in the week noting potential discord with national CBs and Draghi & showed the market who was in charge at the ECB. Draghi also noted he’s tasked staff with preparing further measures if needed. The market took this as a potential tip to QE. EUR/USD dipped to 1.2393 and then moved another leg lower to 1.2363.

USD/JPY was a sideshow in NYC trading, tracking the S&P as all eyes were on Mr. Draghi and the ECB, who took a page out of the BOJ’s book and made an unequivocal case for an even lower EUR. The pair was trapped by option barriers at 115.00 on top and an upward sloping trendline on the hourly’s from below. The one notable development was the chart reversal in EURJPY, with such patterns having a pretty good track record lately of calling turns in that pair, and could mean that JPY supply could be more plentiful in the days ahead.

GBP/USD Cable moved off European highs by 1.6004 moving to a new 1 year low by 1.5835, before rebounding to 1.5850 as the NY session ends. Despite on-target UK IP/MP data cable remains unable able to hold gains near 1.6000. A torrent of USD buying after better than f/c US jobless claims began the selling& was further aided by dovish Draghi comments regarding the expansion of the ECB’s balance sheet & the preparation of further unconventional accommodation, if needed, by the ECB. Sentiment for a UK rate hike which had once been expected to take place this month is now expected in H2 ’15 also added to the pounds weakness vs the USD. Next week’s UK QIR is expected to show inflation continuing to decline, remaining well below the BOE’s 2% target & wage growth remains tepid.

AUD/USD Europe held the pair aloft and in a tight 0.8600/28 range. NY walked in with the pair near the midpoint of that range. Early action saw the pair slide from just below 0.8620 as the effects of Draghi’s presser had the USD broadly bid. The pair broke below 0.8600 and hit 0.8573 before any bounce took hold. A lift back above 0.8610 occurred into Europe’s close but the lift was soon erased. US bond yields were a bit heavy in early NY but regained their composure and aided a push lower for AUD/USD. The pair hit a NY low of 0.8561. Only a small bounce was seen off that low & the pair sat just below 0.8575 late in the day. Asia’s session is likely to be subdued as traders await the US NFP. Job data out of the US earlier this week was upbeat so it’s possible an upside surprise is due. A big topside beat should see AUD/USD suffer another leg lower and weekly lows near 0.8315 and 0.8065 will then be targeted.

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