The sly old fox has managed to torpedo the euro once again with his silver tongue, just when many were starting to think that the ride lower was over.
Greg had a great post on the euro yesterday and the pair has moved below the support seen this month and it’s currently holding on a test so far.
EUR/USD H4 chart 21 11 2014
Ultimately the lows around 1.2350 are going to be the first big level to watch, if we get under 1.2400, and then we can look to the June 2012 support around 1.2225/30
EUR/USD Weekly chart 21 11 2014
Draghi has seemingly stepped up the rhetoric, and particularly with this line;
“ECB will do what it must to raise inflation and inflation expectations as fast as possible”
That’s as strong a signal as you’re going to need to suggest that there’s going to be action coming soon and it sounds desperate. The question is the timing.
We’ve one more ECB meeting before moving to 6 week meetings in Jan. The meeting comes on 4th Dec and the next TLTRO comes a week after that. Unfortunately the TLTRO might have given us a big clue as to whether they act now or wait as a big take up in the TLTRO may have stayed their hand, or conversely forced it.
Our only other clue will be the final HICP read, which is out next week but it rarely swings too far from the flash. It’s still a risk though.
If I had to pick, I’d say the they will wait for the TLTRO numbers before actually taking action but we’re likely to at least get stronger details on the plans at next months governing council meeting. Draghi likes to drop the tape bomb for a move and that will carry him into the New Year, while grabbing a 6 week break to assess.
Draghi – Defiance or desperation?
Whatever it takes
Feeling the pressure
