EUR/USD continues being pressured to the downside and is now seeing new lows. The low so far is 1.1559, which is only a few pips under yesterday’s swing lows, but the pressure continues and we can certainly expect more pressure.
What’s behind the fall? It’s not only the absence of the 1.20 floor under EUR/CHF. Here are 4 reasons for the fall:
- ECB talk: Benoit Coeure, an ECB member, said that “for QE to be efficient, it would have to be big”. He also said that while the risk of deflation is low, low inflation is bad enough. He joins Visco, Nowotny and Draghi in strong statements about QE.
- Lower core inflation: We already knew that we had a y/y drop in prices because of oil, but there was a small silver lining of core inflation edging up. The final read for EZ core inflation saw a downgrade from 0.8% to 0.7%. This is the same low level seen beforehand: no improvement here.
- OK US data: The United States reported higher than expected headline inflation and slightly lower than expected core inflation. Also industrial output came out as expected. Update: now we already have good US data: consumer confidence jumped to 98..2, and that’s giving the pair another push down.
- SNBomb: The shocking removal of the 1.20 floor under EUR/CHF seen yesterday still hurts the euro. The Swiss National Bank was basically alone on the euro bid. Now there’s nobody.
Update: the move extends down with the new low now at 1.1543.
Update: EUR/USD < 1.15 – surrenders to huge pressure and trips stops
More: EUR/USD falls to the lowest since November 2003 – guide to the next big levels
And here is how it looks on the 30 minute chart:
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