ECB pours cold water on the EURUSD
EURUSD breaks to new 7-week lows after ECB hints rate cut
Overnight traders the ECB met and held rates which was widely expected from the central bank. Why did the EUR drop on a result that was expected? The hit wasn’t from the hold but in the policy statement. The ECB commented that they’re holding at lower rates while growth remains low. Hints also came in around lower rates, looking at the effects of negative rates.
Any mention of lower or looking at negative rates is never good news for a currency and the EURUSD refected this with a 45 pip drop closing at 7-week lows. Last night’s move made a few technical points worth looking at, first sellers broke the current recovery trend that been in place since October 19. Second sellers closed below 1.1070 support that had been holding at a medium-term support point till this week. Looking at the Daily EURUSD chart, we have marked in three possible lower targets that sellers could reach if selling momentum continues. Please note these levels could also become support as they’re previous lows.
It’s really up to sellers now to prove that the current breakout will continue the downtrend.