For central banks, it is easier to hit their currencies when they are down, basically making the trend their friend. This seems to be the case for Mario Draghi’s speech in Frankfurt.
The President of the European Central Bank said that a high degree of monetary policy is still warranted. This is interpreted as a hint that the Bank’s QE program will continue for longer rather than be tapered down when it is scheduled to end in March. He also stressed that the degree of uncertainty remains elevated.
EUR/USD was already Trumped by the Donald: the US dollar has been marching forward on expectations for fiscal stimulus, higher inflation and higher interest rates in the US.
EUR/USD gave a good fight over the 1.0720 level earlier in the week but eventually lost the battle. After the pair had remained depressed under 1.07, it did not take too much time, and also 1.06 was breached. The low so far is 1.0581, the lowest since December 2015. Then, Draghi provided more monetary stimulus via cutting the deposit rate but did not expand the QE program, something that waited for March 2016.
The low level in December 2015 was 1.0520, which is the next line of support. It is followed by the 13-year low of 1.0460 seen in March 2015. These are the only two lines left for the pair.
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