Matt Simpson, CFTe, MSTA
CityIndex
EURUSD prints fresh multi-year lows as ECB to begin QE on Monday, making this a trend which is unlikely to change from domestic news any time soon.
Summary
- Rates remained on hold, as expected
- ECB confirm QE will begin on Monday
- ECB to purchase euro based publish sector from the secondary market
- This will continue until a sustained path towards 2% inflation has been achieved
- ECB upgraded growth forecast from 1% to 1.5% in 2015 and 1.5% to 1.9% in 2016
- However nominal growth will remain weak though as ECB downgraded their inflation
- Forecast, making it likely the QE program will be extended beyond 2016.
With bond yields across the Eurozone increasingly negative, across the yield curve, EURUSD is not a market I would want to be calling a bottom on any time soon. The decline from 1.40 highs is becoming increasingly bearish, so the only hope of pullbacks is if we see a weakening USD. Of course a delay in the June rate hike from FED may help with a sizeable retracement but not likely to change the tide, so to speak.
Nonfarm payroll data out could push Euro down further if over 200k jobs are created and at the current rate of decline the Euro could be below 1.0775 next week. Any tick higher is likely to attract bearish attention making it a case of assessing resistance levels to sell into.
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