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Session Recap: Whatever it push... the Euro falls the most in 3 years

FXStreet (San Francisco) - The EUR/USD declined below the 1.3000 area for first time since 2013 after logging its biggest single day drop since 2011. The ECB cut interest rates and Mario Draghi announced combined ABS and covered bond buying program to begin next month.

"Draghi stopped short of QE but he brought the rest of his arsenal, cutting rates and announcing private asset purchases," commented Jamie Coleman from FXBeat. "Which combined with TLTRO should push the ECB balance sheet back up above EUR 3 trln."

In addition, ECB's Nowotny tried to signal currency market to weaken Euro to boost exports as the ECB is worried about Q2 GDP figures.

Currently, EUR/USD is trading at 1.2941, down 1.59% on the day, having posted a daily high at 1.3155 and low at 1.2920. The hourly FXStreet OB/OS Index is showing oversold conditions, alongside the FXStreet Trend Index which is slightly bearish.

The GBP/USD extended declines for third day in a row and after 310-pip drop in September, the Cable is now testing the 1.6330 area. Currently, GBP/USD is trading at 1.6332, down -0.78% on the day, having posted a daily high at 1.6467 and low at 1.6332.

Main headlines in the American session

ECB cuts rates and surprises markets

August 2014 ADP employment report 204k vs 220k exp

US July trade deficit $40.5B vs $42.4B expected

United States Initial Jobless Claims came in at 302K, above forecasts (300K) in August 29

ECB cuts rates and announces ABS purchases to fight low inflation

US stocks eased earlier gains and closed negative; EUR/USD below 1.30

EUR/JPY posts lowest close since November

The EUR/JPY bounced sharply on Thursday and fell 230 pips from daily highs at 138.00 and bottomed at 135.95.
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EUR has room to fall further - TDS

Fundamental and policy divergences, according to TDS FX Strategists, suggest EURUSD weakness can extend, noting that "while rate spreads do imply a degree of short-term overshoot in EURUSD’s decline, positioning and market 'stretch' are not excessive."
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