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EUR/USD free-falls to 1.3040 on dovish ECB

FXStreet (Edinburgh) - EUR/USD is testing levels last seen in July 2013 after the ECB decided to cut the repo rate to 0.05% in today’s meeting.

EUR/USD in 12m-lows

Spot meanders the mid-1.3000s after the European Central Bank lowered its benchmark rate to 0.05% and the deposit rates to -0.20%, catching markets off-guard. The current EUR decline continues to gather pace ahead of Draghi’s press conference, which has unexpectedly grown in importance after today’s decision. “A break of the strong resistant at 1.3170 could lead to further buying towards the next resistant at 1.3200. However, a move below the key support at 1.3105/10 will likely lead to acceleration lower towards the next support at 1.3030”, suggested Quek Ser Leang, Market Strategist at UOB Group.

EUR/USD relevant levels

At the moment the pair is retreating 0.80% at 1.3046 with the next support at 1.3034 (76.4% of 1.2737-1.3996) ahead of 1.2992 (low Jul.15 2013) and then1.2966 (low Jul.11 2013). On the upside, a breakout of 1.3110 (low Sep.2) would aim for 1.3160 (high Sep.3) and finally 1.3196 (high Aug.29).

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