EUR/USD reverses sharply and turns positive above 1.1000 after Draghi
|- Euro erases losses that followed the ECB decision across the board.
- DXY reverses sharply amid EUR/USD rebound, turns negative.
- Media report Trump’s administration discussed an interim trade deal with China.
The EUR/USD pair rebounded almost 150 pips from the lows and turned positive for the day. After the European Central Bank meeting and during Draghi’s press conference the pair bottomed at 1.0927, slightly above the YDT low, now it stands around 1.1040, up 30 pips for the day.
The Euro rebounded across the board and boosted EUR/USD to 1.1068, the highest intraday level in a week. Again it failed to hold on top of 1.1060 and pulled back. Despite moving off lows the tone is still favorable to the Euro, that managed to erase all the bearish pressure.
The European Central Bank cut rates for the first time since 2016 as expected, and also launch a new round of bond buying. “The ECB announced a package of easing measures, but Draghi’s detailed message was less dovish than the initial easing announcement implied. We think more easing will be in store in December, which will keep downside pressure on bond yields”, said Nordea analysts. The “less dovish” message was a key driver in the Euro’s recovery.
In the US, Bloomberg reported that the Trump administration discussed offering a limited interim deal to China in order to delay and roll back some tariffs to Chinese goods. The negotiations might take place over the next weeks. The report boosted equity prices but the rally did not last long.
Levels to watch
To the upside, the key short-term resistance continues to be the 1.1060 area. A consolidation on top would point to further gains for the Euro. The next resistance stands at 1.1115.
On the flip side, 1.1015 is again the immediate support, while below 1.0990 the bearish pressure will likely intensify. Then comes 1.0955 that protects September lows at 1.0925.
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