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EURUSD - Looking for Support at 1.11 as ECB Poised to Act



EURUSD - Looking for Support at 1.11 as ECB Poised to Act
In the last few days the EURUSD has fallen back down to the key 1.11 level where it is currently looking for some support after trying to push beyond the key 1.12 level for the entire week prior. The numerous doji and pin bar candlesticks showed how enthusiastic the selling was during that period repelling buying above 1.12. For the last four months the EURUSD has enjoyed a lot of support from the 1.11 level so it is likely to rebound a little off this level.

Throughout July however the EURUSD fell sharply from above 1.14 down through the support at 1.11 and fall to its lowest levels in more than two years. After enjoying some support from 1.12, as expected this level stepped in as some resistance thwarting attempts to regain lost ground.

In the second half of June, the EURUSD enjoyed a solid surge higher from support at 1.12 back to the 1.13 level before breaking higher and reaching a three month low just above 1.14, although it reversed quickly and fell strongly back to the key 1.13 level before drifting lower and testing the support at 1.12.

For the most part of this year the EURUSD has traded in a range between 1.11 and 1.13 with very few excursions outside and after its recent decline, it is attempting again to remain within the range. As mentioned, over the last few months the EURUSD has been well supported by the 1.11 level and on several occasions, it appeared as if the currency pair was poised to move through this level to a two year low, which it did three weeks ago.

In an interview with the Wall Street Journal European Central Bank (ECB) policy maker Olli Rehn was reported as saying that the ECB should come up with an “impactful and significant” stimulus package at its next meeting in September, that should exceed investors’ expectations.  Mr Rehn, who is governor of Finland’s central bank and sits on the ECB’s rate-setting committee, said the slowing global economy would see the ECB introducing fresh stimulus measures that should include “substantial and sufficient” bond purchases as well as cuts to the bank’s key interest rate.  “It’s important that we come up with a significant and impactful policy package in September,” said Mr. Rehn.  “When you’re working with financial markets, it’s often better to overshoot than undershoot, and better to have a very strong package of policy measures than to tinker,” Mr. Rehn said.  Only last month, ECB President Mario Draghi introduced the possibility of new ECB action in September, however the new comments from Mr. Rehn signal that the amount of stimulus is likely to be at the upper end of analysts’ expectations.  Large concerns about the global economy continue with trade wars and what may happen with Brexit, which have been bolstered by economic data from China and Germany this week indicating two of the world’s largest economies struggling.

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