Eur/usd - page 481
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The single currency recorded a modest decline against the US dollar on Wednesday. After a volatile session, the euro has lost only 16 pips to a closing price of 1.1238. In the short terms the outlook remains neutral as the most likely scenario is a resumption of the uptrend and test the first resistance at 1.1100.
Yesterday the EURUSD went back and forward without any clear direction but closed in the red, in the middle of the daily range, in addition managed to close within the previous day range, which suggests being clearly neutral, neither side is showing control.
The pair is trading well above the 10, 50 and the 200-day moving averages that are acting as dynamic supports.
The key levels to watch are: a daily resistance at 1.1460, a 61.8% Fibonacci retracement at 1.1347 (resistance), a daily support at 1.1237, the 10-day moving average at 1.1181 (support), and a daily support at 1.1097.
Draghi Says Little, Door Still Open For More
The shaving of 2017 and 2018 growth forecasts and recognition of continued downside risks did not prompt the ECB to adjust monetary policy. Rates were left unchanged, as widely expected. The ECB also refrained from extending the asset purchases. This is somewhat disappointing. It was the only action that investors were discussing as a possibility. Bond yields appear to be backing up in response.
Many will suggest that the downgrade of the growth outlook is the most important takeaway from the ECB's press conference. We wonder whether, in the medium and longer terms, the announcement that appropriate Eurosystem committees have been instructed to evaluate stimulus options is more important than the small tweaks in economic forecasts. This seems to be in preparation of additional steps that may be necessary if the asset purchases are indeed extended.
If the asset purchases are extended, there may be a need to change from the current decision-making principle that is based on the capital key. While the capital key will be included in the review, it may be resilient because of the precedent that abandoning it would entail. There are other steps that can be taken to free-up more assets that can be bought in the program.
Draghi pointed out several times that the forecasts for inflation to rebound to 1.2% next year and 1.6% in 2018 are predicated on continued accommodative monetary policy. Although he said that there was no discussion of extending the asset buying past March 2017, he explicitly cited it as a possibility.
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EUR/USD Unable to Sustain ECB-Inspired Gains, Dollar Yields Rise
The Euro moved higher after the ECB decision not to extend the bond-purchase programme, but was unable to sustain the gains as higher US yields and another surge in oil prices triggered a dollar recovery.
The dollar was unable to gain any traction on Wednesday from generally hawkish comments by Fed speakers with markets unwilling to make any adjustment to expectations surrounding US interest rates.
The Euro found support below 1.1250 and gradually edged higher ahead of Thursday’s ECB announcement with increased doubts whether the central bank would make any policy changes. A break above 1.1260 helped trigger some limited stop-loss selling and pushed the currency towards the 1.1300 area.
As expected, there were no changes in the main ECB interest rates, with the refinance rate left at 0.0%, as it has been since the March meeting.
There were also no changes to the bond-buying programme and Draghi was less dovish than expected in the press conference as he denied that any extension to the bond-buying programme had been discussed at the Council meeting. There were also no technical changes to the bond-buying programme.
The Euro maintained a firm tone and pushed above the 1.1300 level for the first time since Yellen’s speech in late August. US jobless claims fell to 259,000 in the latest week from 263,000, which helped underpin confidence in the US outlook even though the immediate market reaction was limited.
The Euro was also unable to sustain the gains and dipped back below the 1.1300 level as longer-term sellers stepped in to take advantage of higher levels.
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Yesterday the EURUSD initially rallied but found enough selling pressure to give back to the market most of its gains but closed in the green, near the low of the day, in addition managed to close within the previous day range, which suggests being slightly on the bearish side of neutral.
The pair is trading well above the 10, 50 and the 200-day moving averages that are acting as dynamic supports.
The key levels to watch are: a daily resistance at 1.1460, a 61.8% Fibonacci retracement at 1.1347 (resistance), a daily support at 1.1237, the 10-day moving average at 1.1189 (support), and a daily support at 1.1097.
The single currency marked and increase against the US dollar on Thursday. The session started at 1.1238 and closed 21 pips higher. The chart continue to develop above the moving averages, while RSI remained at neutral territory. In case the pair keep the upward direction, most likely the will manage to break the first resistance located at 1.1286.