EUR/USD Plunges Sharply As ECB Increases Bond-Buying Unexpectedly

FXOpen

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.

Technical Analysis

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.

EUR/USD Plunges Sharply As ECB Increases Bond-Buying Unexpectedly

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”.

Trade Idea

Considering the overall technical and fundamental outlook, selling the pair on short term rallies appears to be a good strategy.

 

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.

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.

Stay ahead of the market!

Subscribe now to our mailing list and receive the latest market news and insights delivered directly to your inbox.

forex

Forex Trading with FXOpen

Forex Trading with FXOpen

Experience ECN technology for deep liquidity and light-speed trade execution

  • Access over 50 markets
  • Trade with spreads from 0.0 pips
  • Take advantage of commissions from $1.50/lot
Learn more

Latest articles

USD/CAD Consolidates
Forex Analysis

USD/CAD Consolidates

In the second half of April, the USD/CAD chart has shown a decline in volatility following significant spikes observed since February.

The Canadian dollar has stabilised against the US dollar within the 1.390–1.380 range over the

Why Coinbase (COIN) Shares Are Rising
Shares

Why Coinbase (COIN) Shares Are Rising

As the Coinbase (COIN) stock chart shows, trading closed yesterday above the $200 mark — for the first time since March.

Since the beginning of April, COIN's share price has risen by nearly 20%, while the S&P 500 index

Forex Analysis

USD/CHF Rebounds from Multi-Year Low

As the charts show, the USD/CHF exchange rate fell below 0.810 US dollars per franc earlier this week. The pair had not traded this low since the 2008 financial crisis. Demand for the Swiss franc as a safe-haven

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.