7 Nov 2013
EUR/USD flirting with 1.3400
FXstreet.com (Edinburgh) -After bottoming out just below the key support at 1.3300 post-ECB decision, the EUR/USD sparked a recovery to the boundaries of the 1,3400 handle so far.
EUR/USD weaker after ECB
The central bank commanded by Mario Draghi surprised investors in the European afternoon, cutting the repo rate by 25 bp and taking it to a record low at 0.25%. The pair rapidly depreciated more than 2-big figures in the wake of the data and during Draghi’s press conference, although it lacked conviction to penetrate 1.3300. Daragh Maher, Senior FX Strategist at HSBC assessed, “The ECB's surprise decision to lower interest rates will weaken the EUR, and this most likely is exactly what the central bank wants. Net exports have been the major driver of GDP growth over recent quarters, and the rise in EUR was increasingly threatening this engine of growth. Meanwhile, a lower EUR will also help push up inflation through higher import costs”.
EUR/USD levels to watch
As of writing the pair is now losing 0.95% at 1.3393 and a breakdown of 1.3295 (low 7 Nov.) would aim for 1.3294 (50% 1.2755-1.3833) and then 1.3254 (low Sep.13). On the upside, the initial hurdle aligns at 1.3548 (high Nov.6) ahead of 1.3589 (high Nov.1) and then 1.3591 (38.2% of 1.3833-1.3442).
EUR/USD weaker after ECB
The central bank commanded by Mario Draghi surprised investors in the European afternoon, cutting the repo rate by 25 bp and taking it to a record low at 0.25%. The pair rapidly depreciated more than 2-big figures in the wake of the data and during Draghi’s press conference, although it lacked conviction to penetrate 1.3300. Daragh Maher, Senior FX Strategist at HSBC assessed, “The ECB's surprise decision to lower interest rates will weaken the EUR, and this most likely is exactly what the central bank wants. Net exports have been the major driver of GDP growth over recent quarters, and the rise in EUR was increasingly threatening this engine of growth. Meanwhile, a lower EUR will also help push up inflation through higher import costs”.
EUR/USD levels to watch
As of writing the pair is now losing 0.95% at 1.3393 and a breakdown of 1.3295 (low 7 Nov.) would aim for 1.3294 (50% 1.2755-1.3833) and then 1.3254 (low Sep.13). On the upside, the initial hurdle aligns at 1.3548 (high Nov.6) ahead of 1.3589 (high Nov.1) and then 1.3591 (38.2% of 1.3833-1.3442).