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Euro sub $1.11
EUR/USD is in the red again as the momentum from yesterday’s selloff keeps driving the currency pair lower. As I stated yesterday, the decision by the European Central Bank (ECB) to front-load its government bond buying scheme in May and June is behind the downward move.
EUR/USD was finding support in the $1.1120 region, but it pushed lower in quick succession this morning when the German PPI came in at 0.1% in April, meeting expectations.
The official line from the ECB yesterday was that bond trading volumes are thin during the summer period, and it is easier to ramp up the purchases now rather than later. There is also a feeling that the quantitative easing (QE) scheme has yet to fully trickle down to the economy and by speeding up the asset purchase programme, the ECB is hastening the recovery of the region.
The force of the ECB is driving EUR/USD lower, and the support at $1.10 is the downside target, and a move through it will put $1.09 in traders’ minds. The previous support at $1.1120 will be the initial target to the upside, and then $1.12 will be brought into play.