Remarks from European Central Bank executive board member Jörg Asmussen, that the ECB will maintain its present policy for at least one year, were even more dovish than those made by the president Mario Draghi last week. It has therefore created a bias for further declines for the single currency.
With price action falling below the trend-line support suggested by the July 2012 lows, there is a propensity for a retest of 1.2940 levels before a deeper push lower takes hold. Should we see yesterday’s lows give way, there is a possibility that we will see the EUR/USD pair trade and find support at the November lows of 1.2680.
Conversely, better economic data from the US and increased speculation that the Federal Reserve will start to taper back its quantitative easing programme as early as September is giving the dollar a boost across the board, with the dollar index hitting a three-year high yesterday.
The key to direction lies with the Fed minutes which are being announced this evening (London time), as well as a speech from chairman Ben Bernanke where attendees will be allowed to ask questions.