EURUSD

09:47, 03 January

Drops Sharply But Eyes Off Support from 1.13 Level

The EURUSD has been content to trade within a narrow range for the last month or so enjoying support from the current key level of 1.13 and moving up to touch the 1.15 level in the last 24 hours. In the last 24 hours however, the EURUSD has fallen sharply in its largest fall in several months however it will be eyeing off the support at 1.13 again. The 1.13 level has become quite significant of late, and even though it has fallen through this level a few times, it was quickly pushed higher through strong buying which will provide some confidence that the 1.13 level will provide strong support should the EURUSD attempt to decline again.

 

After dropping through the 1.13 level near mid-November, the EURUSD did well to rally higher from its lowest levels in 16 months back up towards 1.15 before easing in the week afterwards. Likewise the 1.15 level has become key of late providing stiff resistance and looming above ready to push prices lower. Towards the end of October 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. 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.

In the middle of December 2018, the European Central Bank (ECB) confirmed the end of its 2.6 trillion euro monetary stimulus scheme and strongly indicated it will keep interest rates unchanged until later into 2019 to support economic growth.  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.  The ECB’s key lending rate stands at 0%, while the rate on deposits held overnight at the central bank is at negative 0.4%.  The Quantitative Easing (QE) programme was launched by Draghi in March 2015 in an attempt to kick-start growth in the eurozone economy and rebuild confidence.  Meanwhile, the ECB has appointed temporary administrators for Italian lender Banca Carige with the decision coming after the majority of the bank's board members resigned on Wednesday.  "The resignation of the majority of the board made the installation of temporary administration necessary to steer the bank in order to stabilize its governance and pursue effective solutions for ensuring sustainable stability and compliance," the ECB said.