Big surprise: the ECB cut the main lending rate from 0.50% to 0.25%.The European Central Bank was expected to leave the main lending rate unchanged at 0.50% and the deposit rate at 0%. It did leave the deposit rate unchanged at 0%. They are keeping this “nuclear” weapon for another time. Any announcement about an LTRO, new forward guidance or thick hints towards a move in December could appear in the press conference that is due at 13:30 GMT.
EUR/USD traded above 1.35 towards the decision and the pair is now trading below 1.34! -The euro is also falling against other currencies.
EUR/USD is falling to a new low of 1.3359. Support is at 1.3325. This is how it looks on the charts. The pair was flirting with uptrend support, and finally it made a convincing break below this line.
Full technical view: EUR/USD loses two long term support lines – very convincingly
The euro advanced yesterday on lower expectations for a move, but the decision was not fully priced in after the very low inflation numbers. However, Draghi did “whatever it takes” and cut the rate to 0.25%. As it is clear to see, this is a huge surprise.
In addition, Draghi’s message tends to shift between optimism and pessimism. As last month was positive, this one could certainly be negative. Is this a short opportunity for EUR/USD?
All eyes now turn towards the press conference of ECB president Mario Draghi at 13:30 GMT. Stay tuned for a live blog of the event. It will also be exciting for EUR/USD because of the publication of the first release of US GDP for Q3.
Resistance awaits the pair at is at 1.3460 and 1.3415. Support is at 1.3325 and 1.3243. For more levels and charts, see the EUR USD forecast.
You can also follow the ECB press conference on Financial Juice.