EUR/USD continues its gradual grind lower, moving below support at 1.0660. Monetary policy divergence is the main driver, and fresh words from the European Central Bank certainly weigh.
For the first time, the ECB’s Chief Economist Peter Praet tied between the Parish Attacks on 13/11 and monetary policy.
The official discussed downside risks and said that they have increased after the Paris Attacks. He added that inflation expectations are weak and that they are ready to act.
He mentioned the de-anchoring of inflation expectations with too much slack is a “dangerous cocktail”. While Praet has been more dovish than others, it seems that the ECB doves have the last word.
The low so far is 1.0649 and the pair seems to stabilize, at least temporarily, around 1.0660. The break is awaiting confirmation.
Today we have the ZEW report from Germany and US inflation figures.
Here is the daily chart of EUR/USD. As you can see, the pair is flirting with the lows seen in late April. The next support line is 1.0530, which serves as the last stop before the 12 year low of 1.0460.Get the 5 most predictable currency pairs