EUR/USD analysis: strongly bearish post-ECB. US Q3 GDP the final nail?
EUR/USD Current price: 1.1668
- ECB trims QE, but dovish enough to weaken the common currency.
- Wall Street in the green sustaining further backing dollar's gains.
The EUR/USD pair plunged to its lowest since October 6th after the ECB's monetary policy decision sent the common currency lower while a positive tone in US equities alongside with rumors suggesting that just Powell and Taylor are left in the run to replace Janet Yellen as Fed's head, fueled the pair's decline in the US afternoon. The pair traded as low as 1.1664, with the following bounce been quite limited, a sign that the bearish potential is still strong and that a bearish breakout is more than likely. The ECB left rates unchanged at record lows as largely expected, and announced a reduction of the bond-buying program to €30B per month from current €60B, starting in January 2018 and up to September 2018. The accompanying statement was overall dovish, as according to it, the "large majority" of members preferred to keep bond buys open-ended, while Draghi reiterated its pledge to keep rates lower "well-past" the end of QE.
US data has barely affected the pair, as attention is mainly focused on Wall Street, which remains afloat ahead of the close. Attention shifts now towards US advanced Q3 GDP, to be released early Friday, with the US economy expected to have grown by 2.5% from previous 3.1%, in the three-month to September.
Technically, and despite the pair has lost over 150 pips since pre-ECB's levels, it's poised to extend its decline, having accelerated far below all of its moving averages in the 4 hours chart and with technical indicators in the mentioned time frame heading sharply lower within bearish territory and near oversold levels. Below the mentioned 1.1660 level, large stops should be accumulated, therefore resulting in further declines with 1.1620 as the immediate support.
Support levels: 1.1660 1.1620 1.1585
Resistance levels: 1.1720 1.1770 1.1825
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.
