Tension towards the highly anticipated Fed decision made way for some nerve wrecking news from the old continent: a fresh statement about Quantitative Easing in the euro-zone hits the euro.
EUR/USD is falling through 1.24. The low so far is 1.2385. Support awaits at 1.2360, followed by 1.2280. Resistance is at 1.2450 and 1.25.
News: Fed removes “considerable time” but calls for patience – USD eventually slides
More: Join a live coverage of the Fed decision from 18:45 GMT
European Central Bank member Benoit Coeure says that there is a broad consensus for doing more. Broad consensus is enough – a unanimous decision is not a prerequisite as we’ve learned from Draghi last time.
More: he also talked about the exchange rate:
the logical market outcome” of these trends is that the euro’s exchange rate should adjust further
The ECB wants a weaker euro. Will it get it soon?
Coeure also said that there is no real question of whether action is needed, but what exact time of action it shall be. While for many, including in this neck of the woods, QE is clear, a clear reminder, coming on top of high tension in the markets and thin trading volume towards the holidays takes its toll.
Earlier in the day, we had a confirmation of rock bottom inflation in the euro-zone: headline inflation stands at 0.3%, far from the ECB’s 2% mandate. Core inflation doesn’t help much with only 0.7%. In the US, headline inflation fell to 1.3% on oil prices, but US core inflation is at 1.7%.
It seems that the ECB is set to announce QE on its January 22nd meeting.
In the US, we have a very interesting Fed decision later this evening.
The big event of the day is the Fed decision in the US. See the preview: FOMC quick preview: what’s more important: employment or inflation? Currencies to trade in both cases
Here is how the move looks on the chart:
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