EUR/USD slipped down a slippery slope and fell below 1.28. Is this the big tumble down or another dip before a rise? The pair is now at 1.2790. Update: this might be the real thing: EUR/USD is already trading below 1.28.
The background is dovish comments made by a German ECB member, and the relatively upbeat JOLTS report in the US, which came out above expectations, even though it was below the highs.
Update: EUR/USD falls to 1.2765 and makes a convincing break of the long term downtrend support line. Here are 4 reasons why this break is real.
Jörg Asmussen, a German member of the ECB which is considered close to Chancellor Angela Merkel, clarified what Draghi already hinted in the press conference: that the forward guidance is for a long time: more than 12 months. He also said that the ECB has more tools that are ready for deployment, and that he does not rule another round of LTRO.
In general, Asmussen offered quite a lot of more action from the ECB. It is thought that some ECB members wanted a rate cut already in July, and this includes president Mario Draghi. The report was not confirmed though.
Draghi sent the euro plunging when he introduced forward guidance: that rates would remain at current levels or even lower for an extended period of time.
It’s also important to remember that a political crisis is brewing in Spain. Fresh revelations directly link PM Rajoy to illegal funds. The Spanish press is all over it.
More:
- EUR/USD weekly forecast
- EUR/USD: Break of 1.2800 Puts 1.2500 In Play – Elliott Wave Analysis
