EUR/USD ended 2014 at the lows of around 1.21, the lowest since 2012. As the page turned on 2015, the pair experienced new lows. The fall below the 1.2042 level seen in July 2012, just before the “whatever it takes” speech” sent the pair to the lowest levels since 2010, the depths of the first Greek crisis.
Here are three reasons for the fresh fall:
- Draghi QE talk: In an interview to a German paper, the president of the ECB provided more hints that QE is coming to the euro-zone quite soon. Indeed, with deflation becoming serious in Spain, the rest of the currency union could follow and urgency is needed.
- Talk of bank withdrawals in Greece: Echoes from that time in 2012 came also from Greece: 2.5 billion euros were reportedly withdrawn from banks there after the political uncertainty came to light. After the presidential bid collapsed before year end, Greeks are going to the polls at the end of the month and the anti-bailout party could win.
- Flows: Central banks are not so positive to the euro any more according to new data. The lack of re-balancing after the recent falls could be the big deal. Full explanation here.
EUR/USD reached a new low of 1.2034 before bouncing a bit back, but it’s still below the 1.2042 level at the time of writing and too close to the 1.20 mark.
Here is how it looks on the chart:
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