Euro Sets Weekly Low Despite the ECB's Call to Action
The possibility of European Central Bank President Draghi’s bond purchasing plan becoming a reality increased during today’s European session, when the ECB’s monthly report said the bank might undertake action in the open market. The ECB also lowered its forecast for GDP growth and inflation in the Euro-zone. Furthermore, ECB’s Noyer said the bank must be ready to act quickly, and intervention must be big enough to have a significant effect on the market.
However, Euro trading did not react positively to the report, but continued to sell-off, possibly as a reaction to the lower forecasted growth and inflation; EURUSD set a new weekly low just short of 1.2300 in today’s session. The pair has been trading in an uptrend over the past two weeks, and might find support by the key 1.2300 level or the 50% retracement of the rally that took place in early August.
The ECB report was the only major news out of Europe thus far. Greek unemployment for May was reported at 23.1%, which the EU said is concerning. Additionally, the UK trade balance fell more than expected, reported at -4308 million British Pounds in June.
Trader should watch for the US trade balance and initial jobless claims which should both be released this afternoon.
EURUSD 15-minute: August 9, 2012
--- Written by Benjamin Spier, DailyFX Research
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