14 Apr 2014
EUR/USD falls sharply as ECB joins jawboning game
FXStreet (Bali) - EUR/USD is trading on a heavy tone in early Asian trade, setting a session low of 1.3841 on the back of dovish comments by ECB's President Mario Draghi over the weekend, warning that easier policies may be necessary should the Euro strength persists.
According to Draghi, via Reuters: "The strengthening of the exchange rate would require further monetary policy accommodation. If you want policy to remain as accommodative as now, a further strengthening of the exchange rate would require further stimulus."
Technically, Valeria Bednarik, Chief Analyst at FXstreet, notes: "For the upcoming days, a test of 1.3966 year high seems likely, while a break above should lead to an inevitable test of the 1.4000 figure, albeit EU CPI readings may produce an intraday kneejerk or even a strong downward correction if they miss expectations. But technically, the picture is bullish, and a weekly close above the 1.40 mentioned level, should open doors for more gains, looking for a test of 1.4250."
To the downside, Bednarik identified "immediate support for the week comes at 1.3830/50 price zone, where intraday buyers have been surging over these last couple of days. If below, next level is 1.3780, 38.2% retracement of the latest daily bullish run. Only below this last market will disregard the chances of strong gains for the week, and even accelerate the downside on profit taking another 100 pips."
According to Draghi, via Reuters: "The strengthening of the exchange rate would require further monetary policy accommodation. If you want policy to remain as accommodative as now, a further strengthening of the exchange rate would require further stimulus."
Technically, Valeria Bednarik, Chief Analyst at FXstreet, notes: "For the upcoming days, a test of 1.3966 year high seems likely, while a break above should lead to an inevitable test of the 1.4000 figure, albeit EU CPI readings may produce an intraday kneejerk or even a strong downward correction if they miss expectations. But technically, the picture is bullish, and a weekly close above the 1.40 mentioned level, should open doors for more gains, looking for a test of 1.4250."
To the downside, Bednarik identified "immediate support for the week comes at 1.3830/50 price zone, where intraday buyers have been surging over these last couple of days. If below, next level is 1.3780, 38.2% retracement of the latest daily bullish run. Only below this last market will disregard the chances of strong gains for the week, and even accelerate the downside on profit taking another 100 pips."