The Euro took a hit and the dollar continued to strengthen after Mario Draghi hinted that he was not ready to slow down the amount of stimulus being pumped into the economy just yet in a speech earlier today. The news saw EURUSD collapse to lows below 1.2400 before rebounding slightly, but the US dollar has seen strength across the board as stocks continued to slide lower.
It’s yet again inflation that is the battle ground for some of these major currency pairs as was reiterated to the European parliament today. In his speech, he called for patience and persistence when it came to the central banks APP and said that the continued growth that the stimulus package is encouraging in the Eurozone would soon see inflation tick towards the banks 2% inflation target.
The current rate of asset purchasing is set at 30 billion euros per month, with growing pressure on the ECB to begin reducing the amount, in a similar move to that carried out by the Fed. However, with Draghi seemingly unmoved by the mounting pressure we could well see the plan run past the current deadline.
From a technical standpoint we have seen the lows come in at close to the downside level at 1.2382, which has been under pinning the market and has seen some downside lows. We’ve also seen a key break below the 61.8% retracement of the recent up move. The clear key level on the downside is now the 1.2335 level which is January lows.
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Soaring US yields trigger the wrecking ball effect as yields become a source of volatility for risk, rather than a source of support