As expected the Bank of England left its interest rate unchanged and did not add to its quantitative easing (QE) program today. The European Central Bank lowered its key refinancing rate by 25 bp. Investors are anticipating additional easing measures to be announced by Mario Draghi during his press conference today at 13:30 GMT.
The major currencies are little changed as a tense two days lie ahead for both European leaders and financial markets. Investor will likely react following Draghi's press conference as traders are on the lookout for two major policy moves:
1. Additional loosening of ECB monetary policy in the face of an EU economy that is slipping towards a recession.
2. The likelihood of the ECB to support European nations with additional sovereign bond purchases.
Even if the ECB hints at additional rate cuts, should the ECB shows its willingness to buy more bonds of Italy , Spain, and Portugal, this may support the EUR going into the two day EU economic summit .
The EUR/USD has resistance at 1.3440 from the 20-day moving average followed by 1.3550 off of last week's high. Support comes in at 1.3360 from the rising trend line off of the November low. A break here would expose the November low of 1.3210.
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