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EUR/USD keeps falling, eyes Tuesday’s low ahead of ECB

FXStreet (Mumbai) - The offered tone on the EUR keeps growing bigger as progress towards the much awaited ECB decision, knocking-off EUR/USD to fresh session lows.

EUR/USD trades below all major DMAs

Currently, the EUR/USD pair trades -0.32% lower at 1.0578, heading towards Tuesday’s low printed at 1.0561. Mounting expectations of fireworks at the ECB gathering on the policy decision today continues to accentuate the downside in EUR/USD.

Moreover, the divergent monetary policy outlooks between the Fed and the ECB will get more pronounced should the ECB roll out stimulus bigger than markets ‘expectations, which would provide double booster shot to the US currency as Fed’s Yellen looks to raise rate in the next few weeks as noted in her speech on Wednesday.

Analysts at Goldman Sachs noted, “We forecast ECB to cut deposit rate to -0.30%, but leave refinancing rate at 5bps & extend QE through end of Q3 2017.” While the BAML Team expects, “ECB to extend QE to at least Sep 2017, alongside raising purchases to E70bln p/m and a deposit rate cut to -0.30%.”

Adding to the bearish pressures on the major, the European stocks are seen trading higher in anticipation of more easy money flooding into markets on ECB QE hopes.

While the upcoming German and Euro zone services PMIs are expected to have virtually no impact on the EUR, as all eyes remain focussed on the ECB event.

EUR/USD Technical Levels

The pair remains capped by 1.06 handle, with the immediate support seen at 1.0558 (Nov 30 Low). Selling pressure will intensify below the last, dragging the pair towards 1.0519 (April Low). While to the upside the next hurdle in sight is located at 1.0607 (10-DMA) and from there to 1.0644/56 (Dec 2 High/ 20-DMA).

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