Today’s Spotlight Market
The Euro is slightly firmer this morning, giving the currency a temporary reprieve from bearish market forces. The currency received some support from profit-taking in the US Dollar, which could be viewed as overbought versus the major currencies.? Although it doesn?t appear that European leaders are complaining about the stronger Dollar, a stronger greenback may have a positive impact on European exports, which could viewed as relatively cheap. This may also stimulate inflation, which would likely be viewed positively by the ECB.
ECB Chair Draghi pledged to begin asset purchases in Europe, similar to the quantitative easing policy the Federal Reserve has in place in the US. The Euro sell-off accelerated on the news, but there is talk that the size of the asset purchases could be much smaller than anticipated. This could be viewed slightly favorably. This could be as important an ECB meeting as we have had in a long time. Traders are hopeful the central bank will pay out a blueprint of its asset buying program, which would give traders a clear outlook on what the ECB intends to do.? More than likely, the ECB language will offer enough ambiguity to give the bank flexibility. It will be a delicate balancing act for the Draghi regime.? On one hand, the European economy has faced major headwinds and may need aggressive monetary policy to stave-off contraction.? On the other hand, if the Euro freefall continues, inflation could spin out of control and the ECB may later be fighting the uphill battle of keeping it in check. ?
Technical Notes? -? View Today’s Chart
Tuning to the chart, we see the December Euro contract blowing through support at the 1.2750 level without so much as a hiccup.? The next significant area of support the Euro may encounter is near the 1.2400 level.? The multi-month sell-off has resulted in extremely oversold levels on the RSI indicator.
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