Euro falls after the ECB interest rate decision

The US dollar rose against major currency peers as investors reacted to the rising Covid cases and measures taken by some governments. In Europe, France and Germany unveiled new measures that will see some businesses asked to close through December. The new partial lockdowns will also limit the number of people in public gatherings. In the US, some cities such as New York have also limited movement as numbers rise. The country confirmed more than 70,000 new cases yesterday. 

The dollar also reacted to the first reading of Q3 GDP data. The preliminary numbers showed that the economy bounced back by 33.1% in the third quarter. This increase was because of an uptick in exports and consumer spending. Further, data showed that more than 751k people filed for initial jobless claims last week. That was the lowest reading since March, when the numbers rose to more than 20 million. It was also lower than last week’s reading of 787k. 

The euro declined against the US dollar as traders reacted to the interest rate decision by the European Central Bank (ECB). The Christine Lagarde-led bank decided to leave interest rates unchanged at -0.5%. It also left its target ceiling for quantitative easing purchases at €1.35 trillion. All this was in line with what analysts were expecting. In the statement, Lagarde expressed concerns about the new wave of the virus that is sweeping Europe and called for governments to provide fiscal support. Earlier on, data by the European Commission showed that the business and consumer survey was unchanged at 90.5 in October. Consumer confidence remained at -15.5. 

The Japanese yen gained against the US dollar after the Bank of Japan delivered its interest rate decision. The bank decided to leave rates unchanged at -0.10%, in line with analysts’ estimates. The bank also left its quantitative easing and yield curve control measures intact. Most importantly, the committee also decided to lower their full year economic and inflation outlook. They also pledged to continue supporting the economy, including by lowering rates and by implementing more asset purchases. Earlier on, data from the country showed that retail sales fell by 8.7% in September after falling by 1.9% in August.

GBP/JPY

The GBP/JPY pair dropped to a low of 135.00, which was the lowest it has been since September 28. On the four-hour chart, we see that the pair has been in a downward trend after it reached a high of 137.80 on October 12. The pair has moved below the 25-day and 15-day exponential moving averages. It has also moved below the neckline of the head and shoulders pattern at 135.33. The signal and main line of the MACD are below the neutral line. Therefore, the pair is likely to continue falling as bears aim for the next support at 134.50.

GER30

The DAX index dropped to a low of €11,530, which is the lowest it has been since June 1. On the daily chart, the index is in its fourth straight day in the red. It is also below the short and medium-term moving averages and below the Parabolic SAR dots. The signal and main lines of the MACD have also moved below the neutral line. Therefore, in the near term, the index is likely to continue falling as bears aim for the next support at €11,000.

EUR/USD

The EUR/USD pair declined after the ECB interest rate decision. It moved to a low of 1.1701, which was the lowest it has been since October 2019. On the hourly chart, the price is below the short and medium-term moving averages while the Relative Strength Index (RSI) has moved below the oversold level of 30. It is also along the lower line of the Bollinger bands. The pair may continue falling as bears aim for the next support at 1.1690.