Forex News: As expected the European Central Bank kept its interest rate unchanged but during the press conference, ECB President Mario Draghi mentioned that low inflation is still a risk and that monetary policy may be adjusted during the March meeting. The Euro reacted quickly to the comments and the pair tumbled below 1.0800.
The pair breached 1.0800 but at the time of writing is bouncing higher. However, we expect another attempt to move below the mentioned level and probably a break based on the dovish stance adopted by ECB President Mario Draghi. A move below 1.0800 would make 1.0710 the first target while a bounce would suggest the pair is headed towards 1.0870 again. However, we favour the short side.
The day lacks major events, with the most notable one being the release of the German Manufacturing PMI, scheduled at 8:30 am GMT. This is a survey based on the opinions of purchasing managers and usually it has a strong impact only if the actual numbers differ a lot from the analysts’ forecast which for today’s release is 53.0. Lower numbers negatively affect the Euro.
The Pound wasn’t affected by major news yesterday but breached short term support, only to return above it later in the day.
The fact that price moved below short term support but failed to continue suggests that the strength of the bears is starting to fade away and that we might see a move closer to 1.4230 today. The oscillators are long oversold, thus supporting such a higher move but keep in mind we are still in a strong downtrend and the possibility of a move into 1.4050 shouldn’t be ruled out.
The British Retail Sales come out today at 9:30 am GMT and this might be the deciding factor for today’s direction. The anticipated change is -0.1% while the previous was 1.7% and usually a higher than expected number is beneficial for the currency, generating a move up.
We hope you had a profitable trading week and we wish you a relaxing weekend.