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Euro calms following QE speculation
The EUR/USD pair is currently trading at $1.161, down 0.03% on Thursday ahead of the ECB’s latest interest rate decision, scheduled for 12:45. However it will be the press conference following the data release that will be the focus of markets, as whispers that a round of quantitative easing will begin from March this year – seeing the ECB expand its balance sheet by €50 billion a month into 2016 – is finally to be verified. As news of the possible QE package began to circulate on Wednesday EUR/USD spiked to $1.168, testing the pair’s 200-hour moving average. However, as markets calmed, the pair found support at the 100-hour moving average, and is currently trading at $1.1583.
On a daily timeframe the pair remains oversold, which suggests that we could see a move higher should monetary easing be confirmed in-line with market expectations, with the price re-testing the 200-hour moving average at $1.167. However, should Mario Draghi throw the market a curve ball and downside support of $1.1583 fails to hold, the next clear downside level to presents itself would be $1.1506.