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Euro traders await French data
Yesterday saw the European Central Bank awake from its slumber and move into action. It cut the base rate down to just 0.05% from 0.15% and also announced that in October it would start buying asset-backed securities. On top of these two measures the ECB has also increased the charge being attached to banks leaving funds in cash, with a charge from its -0.2% deposit rate. The reaction to this was instantaneous as EUR/USD fell by over 150 pips and was 220 pips lower than the previous day’s price. The euro is now trading round levels last seen in July 2013 and is heavily oversold. At the moment their still remains little economic data being provided by the eurozone nations to warrant a change in this bearish sentiment.
Monday should be a calm start to the week, but the first sentiment test for the euro will come on Tuesday morning when France announces both its budget balance and trade balance figures. Considering how oversold EUR/USD is currency traders must be looking for levels to close out shorts or go long, but that might not happen until the double bottom levels of 2013 around the $1.28 level.