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20 May 2015
Euro/Dollar News: ‘front-loading’ QE priced-in? – FXStreet
FXStreet (Barcelona) - News that ECB is accelerating its QE purchases in May and June triggered the sell-off in Euro versus the Dollar, but the central bank’s move looks to be priced-in and the pair might push higher towards 1.1242, explains FXStreet Editor and Analyst, Omkar Godbole.
Key Quotes
“EUR/USD dropped to an intraday low of 1.1117 on Tuesday, as the European Central Bank’s Benoit Coeure said that they could step up their purchases of Eurozone government bonds. What it means is the bank would purchase more than EUR 60 billion bonds in May and June, in order to avoid the seasonal issues that arise in the following months. Coeure also said the ECB may push interest rates further below zero when setting stimulatory monetary policy.”
“As for today, again the focus is likely to on the German-US yield spread. The investors shall also keep an eye on the German yields and periphery nation’s bond yields. A rise in the periphery yields and a relative weakness in the German yields could weigh over the Euro. However, the reports were doing the rounds yesterday that the ECB and EFSF shall not cut liquidity assistance to Greece. Consequently, the EUR may find respite today.”
“The pair could rise back to 1.1242 (23.6% Fib retracement of 1.0520-1.1464), as it is likely to find fresh bids above 1.1104 (38.2% Fib retracement of 1.0520-1.1464). Only a fresh attempt at 1.1293 and a rejection could mean the near-term top is made at 1.1467.”
“On the downside, a break below 1.1040 could see the pair extend losses to 1.1050 (March. 26 high).”
“However, as said earlier, the markets seem to have priced-in the front loading of QE, hence, fresh bids in the range of 1.11-1.1150 could push the pair back to 1.1242-1.1293 levels.”
Key Quotes
“EUR/USD dropped to an intraday low of 1.1117 on Tuesday, as the European Central Bank’s Benoit Coeure said that they could step up their purchases of Eurozone government bonds. What it means is the bank would purchase more than EUR 60 billion bonds in May and June, in order to avoid the seasonal issues that arise in the following months. Coeure also said the ECB may push interest rates further below zero when setting stimulatory monetary policy.”
“As for today, again the focus is likely to on the German-US yield spread. The investors shall also keep an eye on the German yields and periphery nation’s bond yields. A rise in the periphery yields and a relative weakness in the German yields could weigh over the Euro. However, the reports were doing the rounds yesterday that the ECB and EFSF shall not cut liquidity assistance to Greece. Consequently, the EUR may find respite today.”
“The pair could rise back to 1.1242 (23.6% Fib retracement of 1.0520-1.1464), as it is likely to find fresh bids above 1.1104 (38.2% Fib retracement of 1.0520-1.1464). Only a fresh attempt at 1.1293 and a rejection could mean the near-term top is made at 1.1467.”
“On the downside, a break below 1.1040 could see the pair extend losses to 1.1050 (March. 26 high).”
“However, as said earlier, the markets seem to have priced-in the front loading of QE, hence, fresh bids in the range of 1.11-1.1150 could push the pair back to 1.1242-1.1293 levels.”