Sellers coveringThe EURUSD has moved back up to test the 200 hour MA and the 100 bar MA on the 4-hour chart at 1.1783 and the midpoint of the day's trading range at 1.17867. The high corrective price just reached 1.1785. The low price reached 1.1737. That was short of the low for the week at 1.1724 and the low from last week at 1.1729.
For shorts the move is a disappointment. We are still trying to hold the MA and retracement area, but we sit on the edge.
Draghi answers questions
As of January, the ECB will publish monthly redemptions and reinvestmentsWe didn't discuss composition of balance sheetGoverning council stressed unabated growth momentumReal disposable income is increasing, mostly due to gains in employmentThere were some different views on different aspects The stock of assets has become more important than the flowWe didn't discuss the parameters or limitsDraghi doesn't appear to rule out a hike in 2019Market reaction was relatively muted, which seems to say our communication was pretty effectiveDecision was not unanimousWould characterize decisions between as broad consensus on some issues to a large majority on others
The comment on a hike in 2019 led to the bounce in the euro.
Up a little on the day after drop earlierThe USDJPY closed yesterday at 113.72. We have just moved up to a new session high at 113.867 and are currently trading at 113.79. So up on the day by a few pips at least.
Earlier in the day (Asian session), the price fell. That move took the price below the 100 hour MA (blue line in the chart above), but the price fall did find support buyers against a trend line on the hourly chart at 113.32. The low reached 113.33. That low was also above a cluster of support at the 113.248 area. The 38.2% retracement and three separate swing lows from Oct 20-24 came in near that level. So good support held. Buyers against the level have been rewarded with the move back higher.
What now?Admittedly, the price of the pair has traded above and below the 100 hour MA at 113.687 now. It is hard to trust it as a launch point, but traders will still be watching. The current hourly bar has bottomed against the level (kinda grasping though).
Looking at the 5 minute c..
Euro Drops Sharply after ECB Announces to Half Asset Purchases, Extends by 9 Months Euro drops sharply after ECB announced the tapering plan as the markets expected. But traders seem to be unhappy with the cautious tone in the statement. Meanwhile, Dollar remains generally firm, as supported by solid job data. Also, markets are getting more convinced that either Powell or Taylor will be taken as the next Fed chair. Elsewhere, Canadian and Australian Dollar are both trying to recovery yesterday's losses. But not much strength is seen against Dollar yet.
ECB halves asset purchase, extends 9 months
ECB left main refinancing rate unchanged at 0.00% as widely expected. The marginal lending facility rate and deposit facility rate are held at 0.25% and -0.40% respectively. The key in the announcement is that starting January 2018, the next asset purchases will be halved to EUR 30B a month, down from current EUR 60B a month. The asset purchase program will be extended b..
EUR: All set for a dovish taper from ECB – HSBC With little incentive for the ECB to sound hawkish at its upcoming policy-setting meeting, the balance of risks point to some modest downside EUR risks, but it is hard to see President Draghi delivering anything profoundly market moving, according to analysts at HSBC.
“Instead, we see scope for EUR-USD to drift lower to the 100-day MA at 1.1655 and the 6 October low of 1.1619. EUR-GBP may rise somewhat, largely on the back of GBP which looks out of sync with recent rate developments and a more overtly ‘dovish’ BoE hike.”
“The question for the EUR is whether the ECB surprises to the hawkish or dovish side. According to Bloomberg, the consensus expectation is that the ECB will extend its QE programme for nine months at a run-rate reduced from EUR60bn per month to EUR30bn. We find it hard to see where the hawkish surprise might come from. Even if the run-rate were trimmed to say EUR20bn or EUR25bn, we would not expect it to hav..
EUR/USD to remain in range near term – Danske Bank Sverre Holbek, Senior Analyst at Danske Bank, gave his view on the prospects for the pair in the near term.
“We do not expect any significant reaction in EUR/USD on the ECB’s QE recalibration announcement today given the substantial repricing of euro area monetary policy in the FX market seen over the summer”.
“That said, scaling down the QE scheme should add to the market sense that the ECB is ready to take tapering talk to the next level and thus cement the perception that led markets over the summer that Mario Draghi etc. are heading for the exit, albeit slowly”.
“We thus still see EUR/USD around current levels on a 1-3M horizon. In order to see a significant jump in EUR/USD today we are likely to need to see changes to the current forward guidance (not our baseline call). Longer term, we continue to stress that a 2018 rebound towards 1.25 is on the cards as upside risks still dominate the longer-term outlook”.