EUR/USD crashes through $1.24

The support that EUR/USD had at the $1.24 level looks to have been tested once too many times.

Euro and dollar notes
Source: Bloomberg

EUR/USD sees selling pressure

The European Central Bank will be announcing its latest interest rate decision today. Considering the economic backdrop that Europe has it is highly unlikely that this will change, but what will be of interest is the press conference that will kick off 45 minutes after the announcement.

Pressure continues for ECB president Mario Draghi to implement some form of European quantitative easing. Considering the asset-backed security purchasing scheme has only just started, and the next trench of targeted LTRO’s are due to be issued in less than a week, it is maybe not the time for further action.

The last 48 hours have seen sustained selling pressure on the EUR/USD and yesterday the support that had twice held it above $1.24 finally gave in. The ‘sell the rally’ mindset looks to be firmly in place.

GBP/USD neutral despite Osborne’s statement

The Bank of England will also be announcing its official bank rate, at midday today, along with an update on its asset purchasing facility. Neither is expected to change but we will no doubt see a touch more hesitance in the currency markets ahead of the announcement.

Yesterday saw the autumn statement issued by chancellor George Osborne, and although he made several surprising announcements the net effect on the GBP/USD rate was neutral.

As has been the case for the last six weeks, GBP/USD continues to range trade between $1.56 and $1.58. This could well be the case until the 50-day moving average drops down to intersect it.    

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.