The dovish rhetoric of Thursday’s ECB’s press conference continues to linger on through the global currency markets with the EUR experiencing a hefty decline against most of its counterparts. A near 250 pip drop was observed in the EURUSD as prices cut through the 20 and 200 daily SMA resulting in 8 week lows of 1.1071 achieved as of writing.
Sentiment remains bearish for the EUR as increasing fears of an economic slowdown in Europe combined with September’s deflationary CPI of -0.1% has left this single currency vulnerable. With the mounting expectations that the European Central Bank will further QE in the next meeting, more downward pressure may be expected in the EUR.
Whilst Dollar vulnerability still remains the main theme in the global currency markets, USD bulls were instilled with inspiration following the ECB’s hinting of further easing. This momentum to the upside within the USD may be short-lived as with only a 5% probability that the US rates will be hiked in next week’s FOMC statement, USD bulls may be left empty handed which should result inthe bears taking control once again. Despite the string of declining unemployment claims in the US, economic data has been nothing but soft in the months of October for the States. Recent data from China which has renewed fears of a deceleration in its economy combined with the array of soft economic data from the States, offers a compelling reason as to why the Fed may not hike US rates until 2016, and this will enact more punishment on the USD.
The EURUSD is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. A daily close below the 1.1100 support may open a path to the next relevant support at 1.1010.
The EURAUD is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. A breakdown below the 1.5400 support may open a path to the next relevant support at 1.5000.
The EURJPY is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the 135.00 previous higher low has been breached. As long as prices can keep below the 135.00 level, there may be a decline to the next relevant support at 132.50.