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EUR / USD remains under pressure after verbal interventions by ECB

The EUR / USD pair in Asia was trading lower on Thursday. The market continues to play back the unexpected statements of the ECB representatives and the results of the first FOMC meeting in 2021.

 

Yesterday, the EUR / USD pair came under strong pressure after the statement of the ECB representative Klaass Knot that the regulator possesses a wide range of tools, including cutting interest rates, to counteract further strengthening of the European currency. Bloomberg later disseminated information that the market seriously underestimates the likelihood of a cut in interest rates by the ECB.

 

Verbal interventions by the ECB quickly yielded the desired results. The euro has depreciated significantly. Today, the European currency remains under pressure despite the fact that now many experts are questioning the decisiveness of the ECB in the matter of lowering interest rates. In particular, they draw attention to the fact that the ECB's monetary policy statement says that the regulator may not fully use the funds allocated for the emergency bond purchase program.

 

The results of the FOMC meeting did not bring anything new to the market. The regulator has kept the main parameters of the monetary policy unchanged. Jerome Powell noted the continued high uncertainty due to the coronavirus pandemic.

 

After the FOMC meeting, Oxford Economics experts published a forecast according to which the gradual curtailment of the asset repurchase program in the United States will begin in early 2022.

 

Today, the focus of the market will be on statistics from the United States. It is expected to publish primary information on GDP growth in the 4th quarter, a weekly report on the labor market and a report on new home sales.

 

In Europe, investors will closely follow the comments of ECB officials Andrea Enria and Isabelle Schnabel.

 

The currency pair bounced down very strongly from the resistance at 1.2175. Today we expect a further decline below the level of 1.2050. Consider the level of 1.2120 as the key intraday resistance.

 

  • Resistance levels: 1.2120, 1.2175, 1.2255.

 

  • Support levels: 1.2050, 1.1920, 1.1890.

 

The main scenario is an increase to 1.2120 and a downward reversal.

 

An alternative scenario is a breakdown of the resistance at 1.2120 and an increase to 1.2175.

 

The current fundamental outlook is negative. We consider shorts from the level of 1.2120.

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