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Euro supported by $1.24
The EUR/USD pair has dropped to its lowest level in over a week, as the US dollar takes advantage of its safe haven status. The US dollar basket rose to its highest level since March 2009 as a crumbling ruble and an ever-uncertain Japan saw funds flow in to the greenback. The weakness in the euro isn’t solely down to US dollar strength, however, as just over a day away from the ECB meeting the chatter about full-blown quantitative easing is on the rise. Some traders remain sceptical over whether Mario Draghi will go down that route as he has a history of suggesting easing plans, but only embarks on it when he feels he absolutely needs to act.
Today’s services PMI data from the eurozone may provide us with a clue as to what we could be in store for tomorrow, but I suspect only particularly poor numbers would spark a fresh wave of selling the EUR/USD pair. As Alastair McCaig stated, Germany is a major opponent of QE and the powerhouse of Europe tends to get its way.
The old support level of $1.24 has now become resistance, and only when we take out the recent low of $1.2359 will $1.23 become the downside target.