The ECB’s QE Program Lowers Global EUR Values

The ECB’s QE Program Lowers Global EUR Values
March 11, 2015

The Euro is trading well below the 1.07 level, a twelve years low, and we cn only speculate about when parity will become a reality.

Starting with Monday, March the 9th, the ECB (European Central Bank) started buying bonds in its massive quantitative easing program that is bound to bring back inflation and spur growth.

On a similar fashion with what the US did with the last quantitative easing program, the ECB is buying on a monthly fashion, with an open ended program, €60billion worth of government bonds. This and this alone is enough to push any currency lower on such aggressive monetary easing.

The fact that the Federal Reserve in the United States is about to do exactly the opposite, namely to raise the interest rate, could only accelerate the move lower in the euro related pairs against the US dollar. It is showing clear diverging path between the two economic powerhouses.

Besides the fundamental reasons listed above, the technical picture doesn’t look good for Euro related pairs either.

The EURUSD is struggling at the 1.07 area, as mentioned above, and even if we see a bounce towards the 1.10-1.12, it should only be a corrective leg of a potential triangle that will likely be sold again.

EURJPY is breaking below the all important 130 level, and any bounce higher here should only be a reason to sell the pair for what it seems to be a first wave extended impulsive move to the downside.

As for EURGBP, the pair is trading currently well below the 0.71 and it seems that it is only a matter of time until we break the 0.70 as Bank of England usually copies the Fed in the United States, and the cross is in a clear impulsive move to the downside on the higher time frames.

All in all, Euro as a currency clearly has more room to go as current monetary policies favor more weakness.

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Sammy is our forex expert, with over 20 years experience in the financial sector, she will be keeping you up to date with the ups and downs of currencies around the world

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