EUR: Breaking key technical levels post ECB - ANZ


The ECB’s recalibration of QE purchases for 2018 was as expected: reduced bond-buying to EUR30bn per month for nine months and reinvestment of maturing assets well past the end of QE, according to analysts at ANZ.

Key Quotes

“The central bank also updated its forward guidance, which is important for FX markets. At the October meeting, the European Central Bank (ECB) stressed that if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, it stands ready to adjust its QE purchases in terms of size and/or duration.”

“The exchange rate has a large role to play in shaping financial conditions of the region. In its updated macroeconomic projections published in September, the ECB based its inflation projections on a rate of 1.18 for EUR/USD and emphasised that a sustained rise in the exchange rate could undermine the inflation outlook. In part, we feel the latest guidance from the central bank is an implicit signal to FX markets that the ECB has limited tolerance for a much stronger euro. We think the upper tolerance level in the foreseeable future is not much higher above 1.20. Also, the planned extension of QE purchases until September 2018 takes the speculative element of ECB policy settings off the agenda for the FX market for now, with the focus back to the US.”   

“Technically, EUR/USD has broken below the 100-day moving average (1.1679), the first time since last March. This also happens to be the 23.6% Fibonacci retracement from the pair’s high in September 2017 (1.2092) to the low in January 2017 (1.0341).” 

“In terms of positioning, we are also wary that the market is caught long in the EUR. CFTC data showed that leveraged accounts’ net long EUR positions are close to the highest in three-and-a-half years.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!


Latest Forex News

Editors’ Picks

AUD/USD: Above 0.6300 on Good Friday holiday with eyes on China CPI

AUD/USD remains above 0.6300, despite stepping back from the monthly high of 0.6363 to currently around 0.6330, at the start of Friday’s Asian session. Markets in Australia/US are closed for Good Friday, Chinese markets are up with March month inflation data on the cards.

AUD/USD News

USD/JPY: The greenback ticks down, trades above 108.00 figure

USD/JPY consolidates gains above the 108.00 figure. The level to beat for buyers is the 109.50 resistance. USD/JPY bull trend stays intact as the spot trades above the 108.00 handle and the 50/200 SMAs on the four chart.

USD/JPY News

Why stocks are recovering and where next

The S&P 500 index has recovered around half the losses it suffered due to the coronavirus pandemic. Is bad news priced in? How much credit does the Federal Reserve deserve? Where next for equities?

Read more

Gold: Multiple upside barriers before crossing $1,700

Despite probing the multi-year high, marked on Thursday, Gold prices near the key resistances while taking rounds to $1,685 at the start of Friday’s Asian session. The Good Friday holidays in major markets are expected to limit the yellow metal’s moves.

Gold News

Gold: Multiple upside barriers before crossing $1,700

Despite probing the multi-year high, marked on Thursday, Gold prices near the key resistances while taking rounds to $1,685 at the start of Friday’s Asian session. The Good Friday holidays in major markets are expected to limit the yellow metal’s moves.

Gold News

Forex MAJORS

Cryptocurrencies

Signatures