European central bankers will most likely stick to the proposal that QE should be extended by another three months by the end of 2018. but with a smaller volume instead of stopping. The gradual delay of QE has broad support among ECB members and this makes it a tribute to a sure solution when the voting time comes.
At present, bond purchases amount to € 30 billion. monthly by the end of September, leaving the ECB the option of a further extension at each meeting if the inflationary outlook is too weak.
Consensus among central bankers is hardly accidental, given the strong euro growth in the last month. A large majority of central bankers and European investors are of the opinion that a strong euro will currently hinder European exports and rising inflation. Against the background of the ECB's comments, the EUR marks a fall from the record highs reached two days ago.
Given the negative background around the euro and the reduced risk appetite among investors, which will increase US dollar purchases, we expect the currency pair to see a decline in the short term. The first strong support level is in the area around 1.2100. There we can look for suitable signals for long positions. At the moment, the long ones are not good because we have several short signals from weekly resistance levels - two bearings in the resistance zone + spinning Dem (14), Short-remains more likely.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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