The EUR has moved back into the mid 1.3000’s range in overnight and early European trading as the markets await the ECB meeting later this morning.  All expectations are for the European Central Bank to keep rates unchanged at 0.75%.  In the accompanying statement, most analysts expect the ECB to revise downward their economic projections.
Adding to the pressure this morning on EUR, S&P downgraded Greece’s credit rating to selective default from CCC.  Their reasoning was that the new “bond buy back programâ€, “constitutes the launch of what can be considered distressed debt restructuringâ€.  S&P also stated that when the buy back program is concluded, around December 17. they will consider the selective default to be cured and raise the sovereign credit rating.
Technically the EUR failed at the 1.3130 resistance level and part of the pullback in the currency is being credited to unwinding of EUR “longâ€positions taken in the last few days.  Traders were expecting a break of the 1.3140 level and possible move towards 1.3180.  The topside failure and subsequent sell off has seen support tested at the 1.3040 area.  As I write this at 4:35 am, the EUR is at 1.3070.  We remain trapped in the long term range of 1.2800-1.3180.  A daily close below 1.3040-50 would target the 1,2940 area and longer term a test once again of 1.2800.
The Bank of England a lose announces their rate decision this morning and they are also expected to keep rates unchanged at 0.50% and also keep the asset purchase program at GBP 375 billion. Â The accompanying statement will also revise the economic outlook downward as Great Britain does not expect their economy to begin growing until 2016. Â The GBP has traded in a quiet range overnight, currently settling just above the 1.6100 level.
One other central bank announced their rate decision overnight as the Reserve Bank of New Zealand left their rates unchanged at 2.5%, as expected.  Staying in the area of the world, the AUD moved higher as employment grew by an unexpected 13,900 in November, while the unemployment rate dropped to 5.2%.  Despite comments by RBA deputy governor Lowe that AUD is “uncomfortably highâ€, the AUD remained well bid.
USD/CAD has remained in a tight range overnight but traders expect the test of the .9900 support level to occur sooner rather than later. Â A break of the .9900 level would target the .9875 level.
I would expect to see the EUR drift higher towards the time of the announcements later this morning. Â While no rate moves are expected, the accompanying statements are what traders will be waiting for.
