ECB Pressed Conference
There was nothing that was remotely hawkish in Mario Draghi’s statement at yesterday’s ECB meeting.
He committed to running QE until there is evidence of a pick-up in inflation.
Tellingly, he appeared to bend over backwards to suggest that the ECB
wasn’t considering reducing the current stimulus plan.
At the same time though, he didn’t completely dance around the subject, super Mario did acknowledge that the European recovery was ‘robust’.
The forex markets
weren’t buying any of it… apart from the euro.
- trending_upEUR/USD ditched the 2016 high of $1.1616 and hit $1.1677, a two-year high.
- trending_flatGBP/USD is consolidating around $1.30. Neither the dollar nor sterling are inspiring.
If there’s a down side move, GBP/USD could drop to $1.2884, i.e. a minor 23.6% retracement of the March – July rise, the fiddy-day moving average at $1.2866, the 100-day moving average at $1.2812. After that there is $1.2736, a major 38.2% retracement.
(and yes, I did pretend to be cool by saying ‘fiddy’, sorry).
- trending_downAUD/USD has also taken a smack with carry traders dumping AUD and getting out of their positions.
Any pullbacks could be interesting opportunities. The next resistance level is around $0.8000/$0.8015, i.e. the psychological and 200-week moving average levels.
- trending_flatUSD/JPY is calm and sentiment has turned neutral. There is support at the 100-day moving average of ¥111.46. The up trend has dissipated on the back of safe-haven demand for the yen and general dollar weakness.
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