ECB dovish: now watch 1.1105 and 1.0809 - TDS

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Oct 22, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Guatemala) - Analysts at TD Securities noted today's ECB and press conference and made the following assessment.

    Key Quotes:

    "While rates markets will be sensitive to the precise form further easing will take, the FX market is less concerned about these subtleties. We expect the EUR to trade with a bearish bias overall until the 3 December meeting – if not beyond – as Draghi has cemented the EUR’s status as a funding currency of choice. With the USD’s overall fundamentals more ambiguous amid a softer economy and Fed dithering, EUR/USD downside has become more of a one-sided trade."

    "We expect further downside here, but we will need to see spot trade conclusively lower through critical support at 1.1105 and 1.0809 before we think the bearish trend is back in full swing. Instead, we think EURJPY has further room to extend lower over the next few weeks. The key risk here, of course, is the Bank of Japan follows up on the ECB and delivers its own round of additional monetary easing next week at its 30 October policy meeting."

    "We downplay the risks of this, however, as Japanese policymakers have signalled less faith in QE’s power to boost inflation and growth. We see near-term support around 134.45, but the 132.20 region is a more critical threshold for potential weakness, in our view. Against a near-term target of 126.10, stops should be placed just above the 137.00 mark."
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