All eyes on the ECB. There is little doubt that Draghi will announce another QE program and that monthly purchase levels will be cut back from current EUR 60 bln a month. The main question is how much will be cut, and how long the new program will run? We initially expected a trimming to EUR 40 bln for 6 months, but it seems “less for longer” is gaining traction. A cut to EUR 20-30 bln a month and a duration of 9 months would open the way to a full phasing out of next asset purchases at the end of September next year. It seems likely though that Draghi won’t fully commit to a final end date yet, and deliver the net purchase reduction within a wider dovish framework of forward guidance that highlights again that rates won’t rise until well after the end of asset purchases, which would push the first rate hike out to 2019. Data releases won’t change the ECB outlook at this stage and we expect confidence readings including PMIs and Ifo to confirm that the recovery continues to broaden across countries and sectors.
EURUSD has slumped from its post Jackson Hole (August 25) induced rally high of over 1.2100 to October lows under 1.1700. Today its is again below the key 20 day moving average on the Daily chart finding some support in the 1.1740 -1.1700 zone. Resistance to a move higher is the now strongly established trend line and 38.2 Fibonacci retracement level at at 1.1830-40 zone.
Click here to access the HotForex Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! The next webinar will start in:
Senior Market Analyst
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.