The Euro retested 2019 low after ECB rate cut / re-introduction of QE
The Euro spiraled lower and retested 2019 low at 1.0926 (posted on 3 Sep) after European central bank met all expectations of the markets regarding action taken to fight negative impact from weakening EU’s economy and low inflation, as well as outside bloc negative factors, US/China trade conflict and Brexit.
The ECB cut interest rate by 10 basis points to -0.5%, slightly disappointing market expectations for stronger cut, with current rate expected to stay at current or lower levels until inflation starts to pick up and returns close to 2% projection.
The central bank will re-introduce bond buying program, in less than one year after the previous scheme stopped, at monthly pace of 20 billion Euros, starting 1 Nov. but surprised markets with decision to leave the scheme open as long as it is necessary.
The central bank soured the sentiment further by lowering growth and inflation forecasts for the period until 2021, in comparison to their last estimations in June.
Euro’s fresh bearish acceleration found footstep at key 1.0926 support and price action may hold above until markets fully digest the outcome of ECB’s policy meeting, but sentiment remains negative and bias remains with bears, looking for breach of 1.0926/00 pivots that would expose support at 1.0863 (Fibo 76.4% of 1.0940/1.2555, Jan 2018 – Feb 2018 ascend).
Falling 10DMA (1.1010) reinforces initial 1.10 resistance zone, with extended rebound from today’s low, required to stay below falling 20DMA (1.1049) to maintain bearish tone.
Res: 1.1000; 1.1010; 1.1049; 1.1068
Sup: 1.0926; 1.0900; 1.0863; 1.0800