Search ForexCrunch

The determination of Mario Draghi to push through QE despite German opposition finally has results on EUR/USD. So does the green light from the court.

EUR/USD  loses the double bottom and hits a new  low last seen since 2009. It is nearing the launch level of 1.17 of 1999. The  pair is trading at levels last seen in 2006.

Update: the sell-off continues with the pair hitting a new low of 1.1726.

Mario Draghi is in Berlin, meeting today with Chancellor Merkel and finance minister Schäuble. He showed his determination to move on with QE by saying that “the Germans should understand that the ECB has a pan-European mandate“. He also re-iterated the need to act, together with his colleagues Visco and Nowotny.

His  strong statements, given to Die Zeit, came just  before the non-binding recommendation regarding the previous ECB tool: the OMT. While conditions may apply, the statement was that it “may be legal”, and this is enough to provide a green light for bond buying, including QE.

The euro is also falling against the pound, with EUR/GBP breaking to a new multi-year low.

More:  3 reasons to sell EUR/USD targeting 1.10 – Deutsche Bank

1.17 is the launch level and stronger support awaits at 1.16.30. Below this level, we have 1.15, which is a target by many banks.

Here is the chart.

Euro dollar new low January 14 2015 after Draghi OMT decision