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EUR-USD Slides On Rate Decision (Part-1)
By Rox Sweetman | August 7, 2008
European Central Bank have announced her decision to leave interest rates unchanged at 4.25 percent. Traders have expected this but the long anticipated wait is on the ECB president – Jean-Claude Trichet and his subsequent press conference.
The keen interests is on his tone and direction of ECB’s measure on inflation and growth prospects in the 15-nation single currency zone. Recent weeks have seen some poor economic reports from the Euro-zone economies – an indication that a slowdown is brewing. Not that Jean-Claude Trichet would care to hardly admit, but his “No buyer” statement last month saw the EUR bleed slowly to numbers we have not seen for months. Today’s report is yet to play out fully.
After today’s report, we saw EUR/USD shed 150 pips in 90 minutes even at a time the US Unemployment reports came in short of expectation by 7,000. A strong indication of the EUR growing weary of strength for now.
At the moment, EUR is exhibiting this weakness across board. Against the USD, it is trading at 1.5362/70 range after making a high of 1.5473 earlier today. These present levels are nothing serious because they are still within striking distances of the all-time high of 1.6036 and 38% of Fibonacci ratio.
In the near term, we see support at the 1.5230 the 50% Fib level. But our real target for now is pegged at the 62% level of 1.5050. As we have been saying for months, will only be at parity to the dollar at 1.2000/1.2200. That is a long way from here right now.
Tags: ecb, eur-usd, EURJPY, euro zone, growth prospects, inflation, interest rates, jean claude trichet, slides, slowdown
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