09:01, 27 November

EURUSD Analysis

In the last week the EURUSD has eased slightly back towards the key level of 1.13 again which has become quite significant of late. The EURUSD did well to rally higher from its lowest levels in 16 months back up towards 1.15 before easing in the last week. Even though it fell through the 1.13 level a few weeks ago, it was quickly pushed higher through strong buying which will provide some confidence that the 1.13 level will provide some support should the EURUSD continue to decline. Likewise the 1.15 level has become key of late providing stiff resistance and looming above ready to push prices lower.

Several weeks ago the EURUSD did well to surge higher off support at the key 1.13 level after having fallen strongly over the last few weeks from above 1.16. Only several weeks earlier the EURUSD fell strongly from multi month highs above 1.18 down to the key support level at 1.15. In the second half of August the EURUSD rallied strongly as it recovered from a 12 month low at 1.13. For the last five months the 1.17 level has become key as the EURUSD has often responded to it and in most cases it has pushed the currency pair lower.

In early June the EURUSD rallied well and moved back above 1.18 before it experienced a sharp drop down to a near 12 month low just above 1.15. Throughout May, the EURUSD was sold off strongly forcing it down through the well established support level at 1.22 and then 1.17 down to close to a one year low near 1.15. Since the middle of last year the 1.17 level had propped up the EURUSD several times.

The European Central Bank (ECB) President Mario Draghi says that some of the Euro zone slowdown may be "temporary" and that the case to end the ECB's 2.6 trillion euro bond purchase scheme remained unchanged.  At the end of the year the ECB is expected to end its 2.6 trillion euro monetary stimulus scheme and has strongly indicated it will keep interest rates unchanged until later into 2019 to support economic growth.  In Brussels, Draghi said, "A gradual slowdown is normal as expansions mature and growth converges towards its long-run potential," to the European Parliament's committee on economic affairs."  Some of the slowdown may also be temporary," Draghi added. "In fact, the latest data already show some normalizing of production in the car industry which has been impeded by one-off factors." President Draghi that the lost Euro zone growth momentum was quite normal and certainly not enough to derail plans by the ECB to wind back their stimulus any further.