Fundamental analytics

ECB meeting triggered massive Euro sale-off

After a quiet first half of the week, which the market spent in anticipation amid minimal activity, the situation takes a curious turn. One thing we were right in was expecting the higher volatility right after ECB meeting.

So, clearly hawkish result of American regulator meeting led to a short-term growth of the US dollar, after which the dollar fell sharply and today spent most of the day under pressure.

In turn, after ECB meeting and Draghi speech that can also be assessed as a hawkish, Euro moved under significant pressure. Sometimes the market lives with its own logic.

Of course, no one expected a change in rates from the ECB today, and in this sense, no surprise happened. All the attention of traders was directed to the comments of the head of the ECB. Draghi confirmed, the ECB would complete its purchases in December 2018. He also gave a clearer idea of the first rate hike, saying that rates will stay at their current level, at least in the summer of 2019.

Perhaps a weak economic forecast is the reason for the increased sales of the European currency. The ECB lowered its forecast for annual GDP growth to 2.1% from 2.4% this year, leaving the forecast for 2019 and 2020 unchanged at 1.9% and 1.7%, respectively. Inflation expectation for 2018 was rised to 1.7% from 1.4%.

Technically there is a strong downward impulse in EUR/USD market. After yesterday's gains on the background of an unexpected weakening of the dollar, EUR / USD marked the highs of the day at $ 1.1847. Sales were sharply increased at the time of Mario Draghi press conference. At the start of US trading, the pair EUR / USD is trading at $ 1.1655 losing more than one percent for the European session.

The nearest support zone is located in the zone $1.1655-$1.1650. Strategic support is located in zone 1.1515.

Trading recommendations - out of the market


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