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EUR bearish bias reinforced as early full-blown QE re-priced

FXStreet (Bali) - ECB's Draghi sent yet again the Euro market into a tailspin, by suggesting that full-blown quantitative easing might be next, and as such, the market acted accordingly re-pricing an early sovereign QE.

After Draghi confirmed that the ECB staff is preparing further monetary policy measures, price action in the Euro saw a massive supply imbalance with short-lived intraday bounces, which were confidently sold by active fast money accounts, a characterization of a healthy bear market in place.

This time around, the ECB showed unanimity in projections for an expanded balance sheet, as their commitment to take it back to 2012 levels (3 trillion euros aprox) is now reinforced; and since there is only €1trn of covered bonds and ABS eligible for purchase - the ECB will hardly attract much more interest on that particular front - markets are anticipating that the Central Bank will have no choices but to implement a sovereign debt purchasing program sooner rather than later to meet its commitment, meaning that an official announcement either in Dec or Jan looks likely.

Technically, the crack below 1.24 round number exposes more ambitious targets for the bears, with an eventual 1.20/21 hit very much within reach in the next few months. We should also expect any recoveries to be gracefully sold, with levels circa 1.2450 ahead of 1.25 now looking like 'value areas'.

AUD/JPY awaits further impetus from RBA/NFP’s

AUD/JPY is trading at 98.70, up 0.09% on the day, having posted a daily high at 98.74 and low at 98.53.
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