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EURUSD - Resistance at 1.11 Stands Tall after ECB Minutes



EURUSD - Resistance at 1.11 Stands Tall after ECB Minutes
In the last few days the resistance at 1.11 has fended off a strong rally in the EURUSD pushing it lower and keeping it within the range between 1.10 and 1.11. It made the rally off equally strong support at 1.10 after the EURUSD fell sharply from near several month highs close to 1.12 down to a one month low just below 1.10. The 1.10 level provided support propping up the currency pair after the fall and is likely to do so again if called upon shortly.

Throughout October the EURUSD rallied well back above the key 1.11 level however just settled a little feeling some selling pressure from near 1.12. Most of the levels including 1.10, 1.11 and 1.12 have played a significant role in the last six months or so alternating between providing support and resistance.

At the start of October, the EURUSD dropped to a two-year low below 1.09 and started to look precariously placed with no more obvious support levels below it, so it has done well to reverse and move as strongly as it has since then. Throughout August it moved strongly lower from above 1.12, where it had numerous doji and pin bar candlesticks showed how enthusiastic the selling was during that period, and this level played a role again recently pushing the EURUSD lower.

Throughout July 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.

As has been widely covered, towards the end of former president Draghi’s tenure, ECB officials were starting to question his “whatever it takes” approach to the European economy and whether ongoing quantitative easing (QE) was the best solution.  This division within the ECB has been addressed at President Draghi’s last ECB meeting, the minutes show.  Whilst some ECB officials still questioned ECB current policy, there was “broad agreement” that monetary policy needed to be “highly accommodative for an extended period of time”.  “At the same time, a plea was made for patience to allow the measures taken in September to work through the economy, supporting a ‘wait and see’ posture at the current juncture,” the ECB said.  “Looking ahead, a strong call was made for unity of the Governing Council,” the ECB said in its account of the meeting.  “While it was underlined that open and frank discussions in the Governing Council were absolutely necessary and legitimate, it was regarded as important to form a consensus and to unite behind the Governing Council’s commitment to pursuing its inflation aim,” it added.

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This post was written by Graeme Watkins

CEO Valutrades Limited, Graeme Watkins is an FX and CFD market veteran with more than 10 years experience. Key roles include management, senior systems and controls, sales, project management and operations. Graeme has help significant roles for both brokerages and technology platforms.