EUR/USD is sliding back down from the highs of the day, as the clock is ticking towards the ECB rate decision and press conference. After reaching a peak of 1.3044, it is now sliding back towards 1.30. 1.3006 has been the low so far.
German factory orders dropped by 1.9%, contrary to expectations of a rise of 0.5%. Where will the pair end this big day?
EUR/USD fell late in the New York session to the 1.2960 line, which is now a double bottom. It then recovered gradually and managed to pierce through 1.30 in the European session. A successful Spanish bond auction certainly helped. Spain managed to raise over 5 billion euros in 2, 5 and 10 year bond auctions. The 10 year yields dropped to 4.917%, considerably lower than the previous auction that resulted in a yield of 5.202%. Paying less than 5% is a positive development.
However, the depressing German data makes traders a bit more cautious. The ECB is not expected to cut the rates, but Draghi is predicted to express worries about the economic situation. The euro-zone’s economies shrank by 0.6% in Q4, inflation is lower and unemployment is higher.
Here are some previews for the big event:
- The next selloff of the euro could come from Mario Draghi
- EUR could rise violently if Draghi provides a pro-euro speech
- The key to an ECB rate cut is the unwinding of the LTRO
- And for more technical lines and analysis, see the weekly euro to usd forecast.