ECB On Tap For Currency Traders
Today’s Spotlight Market
The Euro currency started the week on a positive note, despite expectations that the European Central Bank will add more liquidity.? The currency has also held up well in the face for the Brexit and the potential fallout from a UK exit from the EU.? The referendum is slated for June 23, so there is quite a bit of time before it comes up for vote.? The US Dollar continues to face pressure, despite a strong showing on the labor front last week.? Some of the strength in the Euro could be attributed to some technical support and oversold conditions.
Fundamentals
Traders are expecting the ECB to be aggressive with rates and quantitative easing when the central bank meets later this week.? German inflation grew at a slower pace than the ECB would like to see, which may open the door for more aggressive policy.? Europe?s largest economy CPI rose 0.4% in January and was completely flat in February.? German manufacturing orders fell by 0.1% in January, which was better than the -0.4% analyst estimate.? The weaker economic data gives the ECB plenty of flexibility when it comes to policy.? The bank is expected to cut the deposit rate for banks from -0.30% to -0.40%. The ECB is also expected to increase its asset purchases from ?60 billion a month to ?70-75 billion of Eurozone debt a month.? There is speculation that the ECB could move to devalue to the Euro if member countries continue to see exports slipping.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the June Euro currency trading down to support just above the 1.0800 level before bouncing back in recent sessions.? The RSI indicator had also been giving oversold readings, which may have contributed to the rebound.? Support around the 1.0800 level can be seen as fairly significant.? Failure to hold the level could lead to declines in the currency.? The chart suggests more range bound trading may be in store for the Euro.
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