EUR/USD analysis: with Draghi out of the way, a FED rate hike takes center stage
|EUR/USD Current price: 1.0605
The American dollar was trading heavily ahead of the ECB, with the EUR/USD pair reaching the 1.0800 level ahead of the announcement, and skyrocketing to 1.0873, after the Central Bank unveiled its decision to extend QE program to December 2017, but at a slower pace, to EUR60bn starting April 2017. The notion that such reduction was the beginning of the end of the stimulus program was behind EUR gains, although the movement was short lived, with the price retreating ahead of Draghi's speech. His clearly dovish words sent the pair down to sub 1.0600, where the pair currently trades. Two things out-stand from Draghi's announcement: the first, is that the adjusted the parameters of its asset purchase program by decreasing the minimum remaining maturity for eligible securities from two years to one year and that the bank could now buy securities with a yield to maturity below the interest rate on the ECB’s deposit facility. The second, is that in the middle of the press conference, he remarked that tapering was not discussed, hammering the final nail into the common currency's coffin.
Currently hovering around 1.0600, the EUR/USD pair is back in the bearish path, barely 100 pips away from this year´s low. Technically, the spike up briefly surpassed the 38.2% retracement of the latest daily decline, but the pair is now trading back below the 23.6% retracement of the same slide at 1.0690, and in the 4 hours chart, its below all of its moving averages, while technical indicators have decelerated near oversold territory, but maintain the risk towards the downside anyway. The immediate support is now the 1.0580/90 region, with a break below it opening doors for further slides towards the 1.0500/20 price zone this Friday, with the dollar underpinned by hopes that the US Federal Reserve will raise rates next week
Support levels: 1.0585 1.0540 1.0500
Resistance levels: 1.0650 1.0690 1.0740
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