EUR/USD retreats from two-week highs toward 1.1300
- US dollar recovers strength versus G10 currencies, still negative for the day.
- EUR/USD fails to break recent range after being rejected from above 1.1350.
- ECB meeting: no major surprises.
The EUR/USD spiked at 1.1360, the highest level in two weeks, but it was unable to hold above 1.1350 and pulled back. The retreat is challenging the 1.1300 zone during the American session after the US dollar recovered ground across the board.
Between data, central banks and expectations
US economic data released on Thursday came mostly below expectations, particularly PMIs. Market participants ignored the numbers. In Europe, the key event was the European Central Bank meeting.
The euro initially reacted positively to the ECB meeting. The central bank left interests rate unchanged and reduced its bond purchases, mostly in line with expectations. ”With today’s decision, the ECB has entered into a very cautious tapering process. The details of the taper are less clear-cut than we had expected. The ECB did not announce a (third) transitional asset purchase programme. It decided instead to ensure the same level of PEPP flexibility in the asset purchases, including allowing it to purchase Greek bonds, and with the reinvestment of PEPP purchases”, explained analysts at ING.
Later the common currency lost momentum and started to pullback, trimming gains. At the same time, the US dollar gained strengths, pushing EUR/USD further to the downside. So far, the correction found support at 1.1300.
The EUR/USD is back at the previous trading range between 1.1350 and 1.1250. The euro needs a firm break above 1.1350/60 to clear the way to more gains. On the flip side, a slide below 1.1250 would point to further losses.
Technical levels
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
