EUR/USD, ECB stimulus & Eurozone interest rate trending points
- ECB announced a fresh set of ‘targeted longer-term refinancing options’ in the morning and European Central would likely to launch the program in September this year, which continue till March of 2021 to grapple with global slowdown
- ECB had also cut yearly growth forecast to 1.1% from previous 1.7% and said the interest rates should be at the current level till the end of 2019, which significantly soured the currency appeal, and euro toppled below its critical support level at 1.1250, currently residing at 1.1230
- Next level to watch for EUR/USD pair should be at 1.1190 and a daily closure below 1.12 level could pivot the EURO downwards below 1.11 level.
EURO breaks critical support level at 1.1250, set to break Nov. 2018 low
On Thursday, the 7thof March 2019, the Euro slid well below $.1250 region after European Central Bank had delayed the timing of its first post-crisis rate hike to as early as 2020 and initiated a new round of cheap loans to banks. The decision of delaying the interest rate hike came as a surprise to many analysts, although the move had extended the downtrend for EUR further. After falling for six consecutive days in a row, EUR dropped 0.72 percent so far to 1.1224 in the intra-day trading, posting its largest intra-day loss since January 2nd, 2019 (1.05 percent), although EURO would likely to fall further below 1.1215 level, a critical pivot point and a breach below 1.12 level could retest an 18-month low at 1.1150. Nevertheless, before the ECB decision, Euro had been holding strong above 1.13 level, however following the release of new decisions and a growth forecast cut, the Euro dropped over 0.70 percent in a couple of hours.
EUR/USD daily price chart
Nevertheless, before the ECB decision, Euro had been holding strong above 1.13 level, however following the release of new decisions and a growth forecast cut, the Euro dropped over 0.70 percent in a couple of hours.
Although the currency pair had been experiencing a quieter run since the beginning of 2019, yet the recently introduced monetary policy may jolt EURO downward to a fresh one and a half year low in to the 1.10 territory. The single currency had also dripped versus Swiss Francs to 1.1354, while the American dollar rose 3 percent to 97.11 against a basket of six currencies.
EUR/CHF daily price chart
EUR/GBP daily price chart
From a technical perspective, whenever a single currency totters itself without much ecological bias from other currencies, there is always chance of an abrupt downswing in a near-term outlook.
At this moment, Euro has been trading at a critical level and the only way to move seems downwards, while the American dollar appears to be strengthening, as the number of US citizens filing for unemployment benefits for the first time had declined surprisingly last month.
The single currency had also dropped below 85.50 against the GBP, keeping the currency dependent UK’s FTSE 100 vulnerable, as GBP had been biting its times well above 1.3130 region despite growing Brexit debate.
In a near-term outlook, Euro would likely to trade between the 1.10-1.12 region, while another upswing above 1.13 appears much more unlikely, considering a downbeat ECB stance and a much stronger American Dollar.
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[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]