The single European currency declined considerably paired with the world's major currencies. Especially the decline was seen in its American counterpart which led to a breakthrough of major support levels that might be difficult to return as it seems at first glance.
The pressure on the euro has increased and kept on going. Major sales occurred after the ECB said that QE purchases will amount to 30 billion euros a month which will start operating in January 2018. Purchases under the QE will continue until September 2018, and if necessary, beyond the said date. The regulator noted that if the prospects deteriorate again, the council may increase the size and duration of QE.
Despite the changes in the scope of the program, many experts expected more decisive action from the European regulator but it did not exist.
ECB President Mario Draghi said yesterday that rates are expected to remain at current levels for a long period, and the decisions taken at the meeting will maintain a very favorable financing conditions. M. Draghi also drew attention to the fact that current significant monetary stimulus is needed to maintain a strong and large-scale economic recovery.
As for the program of bond redemption, the current parameters and limits for QE are flexible enough and can be adjusted at any time, according to the ECB president.
As for the technical picture of the EUR/USD pair, the prospects for the euro's growth by the end of this year are increasingly "coming to naught."
Looking at the daily chart, it clearly shows the head-shoulders reversal pattern. The development of the lower limit of this model in the region of 1.1680 occurred, which indicates a change in the medium-term upward trend in the euro. The following major support levels are located in the regions 1.1600 and 1.1560.
Today, the attention of traders is focused on the US GDP data for the 3rd quarter of this year. If the data came in better than economists forecasts, the growth of the US dollar will continue against other world currencies.
Yesterday, the labor market data showed an increase in the number of Americans who applied for initial claims for unemployment benefits. According to the report of the US Department of Labor, the number of initial applications for US unemployment benefits for the week from 15 to 21 October increased by 10,000 and amounted to 233,000. Economists had expected the number of applications to be 235,000.
* The presented market analysis is informative and does not constitute a guide to the transaction.
