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Euro Drops Below 1.10 vs. US Dollar Amid ECB Pre-Positioning

Euro Drops Below 1.10 vs. US Dollar Amid ECB Pre-Positioning

Ilya Spivak,

Talking Points:

  • Euro declines amid pre-positioning for ECB monetary policy announcement
  • Australian, Canadian Dollars fall as Yen gains amid risk aversion overnight
  • Quiet docket of scheduled event risk puts financial markets in digestion mode

The Euro underperformed in overnight trade. A singular catalyst was not readily apparent, suggesting the move may have reflected pre-positioning ahead of this week’s much-anticipated ECB policy announcement. The central bank is expected to cut the deposit rate by 10bps to -0.4 percent and may increase the size of monthly QE asset purchases.

The single currency corrected higher as traders unwound bets on depreciation over the past week. Indeed, the latest COT positioning report showed speculative net-short exposure fell for the first in eight weeks in the five days through March 1. Within that context, a downswing representing a move toward “neutral” does not seem unreasonable.

The sentiment-linked Australian and Canadian Dollars tracked stocks lower. The MSCI Asia Pacific regional benchmark equity index fell 1 percent in a move that appeared to reflect follow-on momentum from a selloff on Wall Street. The anti-risk Japanese Yen traded higher against most of its major counterparts, although the benchmark USD/JPY cross traded little-changed on the session.

Looking ahead, a quiet economic calendar in European trading hours offers little by way of scheduled event risk to shape price action. That seems likely to make for a digestive tone, with markets in retracement mode until the next round of high-profile news-flow by way of the BOC and RBNZ rate decisions crosses the wires.

Losing money trading the FX market? This might be why.

Asia Session

21:45NZDCard Spending Retail (MoM) (FEB)0.7%0.3%0.4%
21:45NZDCard Spending Total (MoM) (FEB)-0.1%-0.6%
23:30AUDWestpac Consumer Conf Index (MAR)99.1-101.3
23:30AUDWestpac Consumer Conf SA (MoM) (MAR)-2.2%-4.2%
23:50JPYMoney Stock M2 (YoY) (FEB)3.1%3.2%3.2%
23:50JPYMoney Stock M3 (YoY) (FEB)2.5%2.6%2.6%
00:30AUDHome Loans (MoM) (JAN)-3.9%-3.0%2.7%
00:30AUDInvestment Lending (JAN)-1.6%--0.1%
00:30AUDOwner-Occupier Loan Value (MoM) (JAN)-4.3%--0.2%
06:00JPYMachine Tool Orders (YoY) (FEB P) --17.2%

European Session

09:00GBPBOE's Bailey Speaks in London --Low
09:30GBPIndustrial Production (MoM) (JAN)0.4%-1.1%Medium
09:30GBPIndustrial Production (YoY) (JAN)0.0%-0.4%Medium
09:30GBPManufacturing Production (MoM) (JAN)0.2%-0.2%Medium
09:30GBPManufacturing Production (YoY) (JAN)-0.7%-1.7%Medium

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.