3 Dec 2015
EUR/GBP clocks five-week high on hawkish Draghi
FXStreet (Mumbai) - The EUR/GBP pair rose to 0.7238; its highest since Oct 28; after ECB’s Draghi announced an extension of the QE program and not the expansion as markets had been expecting.
Back below 0.72
The cross has trimmed gains, to trade below 0.72 levels; but still trades 1% higher on the day. The decision to cut deposit rate was largely expected and priced-in. However, the markets were also expecting the bank to expand its QE program by another EUR 10 billion per month.
But, that did not come through. Draghi merely extended the maturity to end-March 2017. This appears to have disappointed EUR bears, leading to sharp squeeze in the EUR shorts.
EUR/GBP Technical Levels
At 0.7195, the immediate resistance is seen at 0.7238 (daily high), above which the gains could be extended to 0.7269 (10-WMA). On the other hand, a break below 0.7192 (100-DMA) would expose 0.7145 (61.8% of 0.6931-0.7493).
Back below 0.72
The cross has trimmed gains, to trade below 0.72 levels; but still trades 1% higher on the day. The decision to cut deposit rate was largely expected and priced-in. However, the markets were also expecting the bank to expand its QE program by another EUR 10 billion per month.
But, that did not come through. Draghi merely extended the maturity to end-March 2017. This appears to have disappointed EUR bears, leading to sharp squeeze in the EUR shorts.
EUR/GBP Technical Levels
At 0.7195, the immediate resistance is seen at 0.7238 (daily high), above which the gains could be extended to 0.7269 (10-WMA). On the other hand, a break below 0.7192 (100-DMA) would expose 0.7145 (61.8% of 0.6931-0.7493).