EUR/USD Analysis: flirting with multi-year lows

Valeria Bednarik FXStreet

EUR/USD Current price: 1.0937

ECB announced a rate cut, open-ended QE as an “ample degree” of accommodation still needed.
US data encouraging, core inflation revised higher in August.
EUR/USD poised to extend its decline toward the 1.0840/60 price zone.

The EUR/USD pair collapsed below the 1.1000 figure and trades near its yearly low of 1.0926, following the European Central Bank monetary policy announcement. Draghi & Co. delivered, cutting rates by 10 basis points and reintroducing open-ended QE, announcing bond buying for €20 billion per month starting November 1^st. The accompanying statement showed that policymakers dropped date-based forward guidance. Speaking in the press conference, Draghi said that an ample degree of accommodation is still needed

In the US, initial jobless claims for the week ended September 6 resulted at 204K, better than the 215K expected. Inflation in the world’s largest economy was up by 0.3% monthly basis and by 2.4% when compared to a year earlier, in August, net of food and energy prices. Despite far from impressive, the figures gave further support to the greenback.

EUR/USD short-term technical outlook

The EUR/USD pair touched the yearly low before bouncing a couple of pips, under strong selling pressure as President Draghi keeps speaking. The pair is technically bearish according to technical readings in the 4 hours chart, further plummeting below all of its moving averages, and with technical indicators heading firmly lower, entering oversold readings. A break through 1.0920 should favor an extension toward the 1.0840/60 price zone, the next relevant support area.

Support levels: 1.0920 1.0890 1.0850

Resistance levels: 1.0955 1.0990 1.1025

View Live chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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