Markets

EURUSD moves higher and then lower in volatile trade after ECB hybrid policy change

Continue the 80B per month followed by 60B

The ECB presented a hybrid program. Until April the gas will be powering the QE engine at 80B per month. After that, the power will come from a slower 60B QE program.

The EURUSDs initial reaction was a spike higher. The high reached 1.0872. We just traded to new session lows at 1.0740. The high reached 1.0872.

The high was between the June swing low at 1.0909 and the October swing low at 1.0849 (see daily chart above). The high was also below the 50% of the move down from the Election high. That level comes in at 1.0901 (also chart above).

Looking at the hourly chart, the pair has moved below the topside trend line at 1.0754 level The 100 hour MA comes in at 1.0711 currently. The lows from yesterday were in the 1.0708-14 area.

Now we wait for Draghi and his comments.

Expect the volatility to continue through the press conference. I would guess he might see the EU on the cusp of digging out the hole but hedged with the flexibility clause after April. That type of talk has the risk of ups and downs as the tide swings. THe market will be voting as each sentence and headline is read.

Technically, that 100 hour MA area is a level to gauge more bearishness on break /or support for buyers. On the topside the 200 bar MA on the 4-hour chart was acting as resistance before the release. It may be a clue for bulls through the comments. There are some trend lines in between and other targets on breaks (the 200 hour MA at 1.0667 for example.

Caveat on days like today. He speaks for an hour. Typically, the first 20 -30 minutes have most of the meat and potatoes. But at any point, a headline can cause a rush to the upside or the downside. The rush in and out that we saw was all the comments at once. The press conference is a long drawn out ordeal where Draghi can manipulate with what he says or does not say at one minute, and what he not not say or says at another minute. So be aware.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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