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Forex: EUR/USD tumbles below 1.310 on ECB’s Draghi

FXstreet.com (Barcelona) - The pair had been sidelined since mid-European session, ranging at 1.3100/15 most of the time, but suddenly, the EUR/USD took a dive and is plunging below the 1.3100 handle. The fall has reached 1.3067 low, so far, and came in reaction to ECB Draghi’s speech. The head of the central bank said they are ready to act again, following last week’s 25bp refi rate cut to 0.50%.

Draghi’s comments in Rome include advices to governments, defending tax reduction as priority and more equal wealth distribution in the Eurozone to improve economic performance. However, budget consolidations remains imperative, particularly for the most indebted countries.

EMU retail sales contracted -2.4% in March (YoY), down from -1.7% (revised lower from -1.4%) and below -1.9% expectations. On the month, data dropped by -0.1% as expected. Spanish unemployment fell by -46.1K instead of rising 17.1K in April. Data follows a -5.0K drop in March.

April Services PMI figures are the following: Germany eased only from 50.9 to 49.6 (consensus of 49.2); France rose from 44.1 to 44.3 despite unchanged expectations; Italy beat consensus of 45.8 by jumping from 45.5 to 47.0; Spain dropped from 45.3 to 44.4 (consensus of 45.7). EMU Markit services PMI rose from 46.4 to 47.0, beating consensus of 46.6, and PMI Composite was expected to stay unchanged at 46.5 but improved to 46.9.

“We think, today the price may fall down towards the level of 1.3090, start a new ascending movement to reach the first target at 1.3190, move downwards again towards the level of 1.3140, and then form another ascending structure towards to reach the level of 1.3245”, wrote Roboforex.com analyst Igor Sayadov. “Later, in our opinion, the pair may start forming a reversal pattern to continue moving downwards with the target at 1.2700”, he added.

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ECB Draghi’s speech triggered the tumble of the euro today, affecting the EUR/JPY performance as it fell from 130.20 area down below the 130.00 mark. The cross is currently at 129.70 (-0.18% on the day) lows as the President of the European Central Bank said they’re ready to act again, following last week’s 25bp refi rate cut to 0.50%.
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