- Euro remains weak after ECB decision.
- The Catalan crisis goes on as Puigdemont does not call a snap election.
- USD gains momentum as yields move off lows.
Following the ECB decision and Draghi’s press conference the euro dropped further in the market and sent EUR/USD to a fresh 2-week low at 1.1686.
ECB, Draghi and USD
The euro fell sharply after the taper announcement from the ECB. The decision was in line with expectations but market participants considered the message as tilted to the dovish side. The decision was not unanimous as a minority of the members wanted to put a precise end date. Despite the optimism from Draghi, the euro weakened.
After Draghi, news coming from the US pushed US bond yields off lows and offered support to the greenback. The House of Representatives passed a budget blueprint, clearing the way for tax cuts. The 10-year yield rose back to 2.44% after falling earlier to 2.40%.
Meanwhile, the crisis in Spain continues after Catalonia’s leader ruled out snap elections, prolonging the standoff with the national government. During his press conference, Draghi said that they are watching closely the crisis.
EUR/USD bearish momentum intensifies
The pair is holding near the lows with a clear bearish momentum after breaking below the lows of the previous two weeks. A test of October lows at 1.1665/70 appears likely for the coming session from a technical perspective. According to analysts from Brown Brothers Harriman, a close below yesterday's low (1.1750) would be seen as a bearish development.
In order to remove the short-term pressure, EUR/USD needs to rise back on top of 1.1740. Above resistance levels might be located at 1.1795 (Oct 24 high) and 1.1835 (Oct 25 high).
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD gains momentum above 0.6500 ahead of Australian Retail Sales data
AUD/USD trades in positive territory for six consecutive days around 0.6535 during the early Asian session on Monday. The upward momentum of the pair is bolstered by the hawkish stance from the Reserve Bank of Australia after the recent release of Consumer Price Index inflation data last week.
EUR/USD holds positive ground above 1.0700, eyes on German CPI data
EUR/USD trades on a stronger note around 1.0710 during the early Asian trading hours on Monday. The weaker US Dollar below the 106.00 mark provides some support to the major pair.
Gold trades on a softer note below $2,350 on hotter-than-expected US inflation data
Gold price trades on a softer note near $2,335 on Monday during the early Asian session. The recent US economic data showed that US inflationary pressures staying firm, which has added further to market doubts about near-term US Federal Reserve rate cuts.
Ethereum fees drops to lowest level since October, ETH sustains above $3,200
Ethereum’s high transaction fees has been a sticky issue for the blockchain in the past. This led to Layer 2 chains and scaling solutions developing alternatives for users looking to transact at a lower cost.
Week ahead: Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.