The all-important ECB meeting is just 8 days away, and some information (or misinformation) is beginning to emerge.
EUR/USD drops sharply, reaching just 5 pips from the previous 7 month low and not really bouncing.
The reports talk about broader bond buying under the Asset Purchase Program (APP) or the ECB’s QE plan. In addition, the Frankfurt based institute is considering a two tier program for the negative deposit rate. In Switzerland, such a program is already in place.
No numbers are emerging just yet. It is important to remember that the ECBÂ president Mario Draghi has shown his ability to under-promise and over-deliver, and this may happen once again.
The number in EUR/USD are clearer: the low so far is 1.0597, just 6 pips above the 1.0592 level seen earlier in the week. This is the lowest since April. The low in that month was 1.0530, which is the last support line before the 12 year low of 1.0460.
Resistance appears at 1.0630 and 1.0670. So far, the bounce hasn’t reached these levels.
While a hike from the Federal Reserve seems to be more priced in, a move from the ECB and its details remain unclear.
In our latest podcast we explain how to trade the euro printing machine:
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