The Euro (EUR) nosedived against the US Dollar (USD) yesterday and extended downside movement on Friday, dragging the price of EURUSD to less than 1.0650 following the European Central Bank (ECB) announcement to extend its Quantitative Easing (QE) program. The technical bias remains bearish because of a lower low and lower high in the recent wave.
As of this writing, the pair is being traded near 1.0618. A support can be seen around 1.0600, the psychological number ahead of 1.0505, the swing low of the last major downside move and then 1.0000, the parity level.
On the upside, the pair is expected to face a hurdle near 1.0660, the short term horizontal resistance area ahead of 1.0729, a major horizontal resistance zone and then 1.0873, the intraday high of today. The technical bias will remain bearish as long as the 1.1300 resistance area is intact.
ECB Expands QE
The European Central Bank has extended its bond buying programme until the end of 2017, as Mario Draghi insisted there was “no question” of ECB tapering even as monthly purchases were cut by a quarter. The ECB president revealed a split among policymakers over the central bank’s decision to extend quantitative easing but reduce monthly purchases to €60bn next April from €80bn. Markets and analysts had expected purchases to continue at €80bn until next September. Mr Draghi said buying bonds with yields below this level remained an “option” rather than a “necessity”.
Considering the overall technical and fundamental outlook, selling the pair on short term rallies appears to be a good strategy.
* FXOpen International, Innovative Broker of 2022, according to the IAFT
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.