8 May 2014
EUR/USD extends decline to support area
FXStreet (Córdoba) - The EUR/USD continues to suffer on the back of Draghi's hint at action, with the pair falling to fresh weekly lows below 1.3850.
The euro came under pressure across the board after ECB President Mario Draghi said the Governing Council feels comfortable with acting next time. However, as the initial shock dissipates, analysts start to raise skeptical arguments on whether the ECB will deliver.
"Draghi has in essence promised action at the June meeting. EUR/USD could sell off in anticipation of that meeting and fears the action could be substantial", said Jamie Coleman, analyst at FXBeat. "If they do nothing more than cut the refi rate to near-zero and trim the deposit rate mildly below zero, then EUR/USD will likely rally. It will take a QE-like program or intervention to have much sustainable impact".
EUR/USD tests support at 1.3850
At time of writing, the EUR/USD is trading at 1.3855, 0.39% down on the day, after being at a 2 ½-year peak of 1.3992, just a few pips away from breaking through 1.4000 minutes before the comments. The pair hit a low of 1.3848 but it lacked determination to decisively break below the support area.
The euro came under pressure across the board after ECB President Mario Draghi said the Governing Council feels comfortable with acting next time. However, as the initial shock dissipates, analysts start to raise skeptical arguments on whether the ECB will deliver.
"Draghi has in essence promised action at the June meeting. EUR/USD could sell off in anticipation of that meeting and fears the action could be substantial", said Jamie Coleman, analyst at FXBeat. "If they do nothing more than cut the refi rate to near-zero and trim the deposit rate mildly below zero, then EUR/USD will likely rally. It will take a QE-like program or intervention to have much sustainable impact".
EUR/USD tests support at 1.3850
At time of writing, the EUR/USD is trading at 1.3855, 0.39% down on the day, after being at a 2 ½-year peak of 1.3992, just a few pips away from breaking through 1.4000 minutes before the comments. The pair hit a low of 1.3848 but it lacked determination to decisively break below the support area.