EUR/USD en route for a test of the May lows, last stop for refuelling for a fresh bear 2018 leg
|- EUR/USD carving out fresh lows on ECB in stark contrast to the Fed.
- Eyes are now on the May low down at 1.1508.
EUR/USD has been inching away to make fresh lows at 1.1562 as the dollar squeezes out some further upside in illiquid early Asian trade, going with the flow. EUR/USD dropped on a more dovish outcome than might have been expected from the ECB that offered more forward guidance, pushing back interest rate hike expectations and downgrading the 2018 growth outlook.
The synchronized global growth theory is looking more biased in favour of the US, and the retails sales beat today was a surprise that further fueled the greenback to fresh highs vs the euro. The hawkish Fed position stands in stark contrast to most regions' central banks and that will be underpinned tonight with the BoJ meeting as well, perhaps fuelling the dollar even more.
Draghi sends euro off a cliff
- ECB’s Monetary Policy Statement surprises by outlining the ending of APP and more! - Westpac
The ECB announced the QE changes but also said that there will be no rate change until after summer 2019; so that is way over the horizon. Furthermore, Draghi sunk the euro when he noted muted inflation, helping the DE-US yield spreads move further in the greenback's favour sending the single unit below 1.1600.
EUR/USD levels
Eyes are now on the May low down at 1.1508 with new low set and RSI supporting the bearish outlook. This is a key area and a break there opens a fresh bear leg in 2018'correction of early Jan's rally from just sub 1.0500. "Below 1.1415 would introduce scope to the 61.8% retracement at 1.1186," analysts at Commerzbank argued.
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