The forces EUR/USD and the single currency hurt and down to fresh monthly lows around 1.1680 because of the further selling pressure. The European Central Bank signaled more monetary stimulus, as the region’s two largest economies brace for the second nationally imposed lockdown.
They decide to leave broader monetary policy and interest rates unchanged but also suggested that additional policy action could be taken in the eurozone as soon as possible in December. In December, new economic projections might allow a comprehensive reassessment of risks and the economy.
Due to Dovish ECB, the EUR/USD Weakens
EUR/USD extended its decline to levels in the 1.1680 regions last seen in late September in response to a Chief Lagarde dovish tone at her conference after the benchmark interest rate remained unchanged by the ECB on Thursday.
Indeed, the pair further weakened after she said that at a faster pace the economy losing momentum and businesses investment continues weighed by uncertainty, all hitting the prospect of downside risks. Back then, she also hinted at the idea.
She hinted that until early next year, there is an expectation that inflation will be remain negative and that prices could push upwards due to a recovery in demand and recalibration will see all instruments.
It will be done following the updates of the Central Bank will be released in December. Once again, she reiterated that there is should be support to help to recover the economy by doing fiscal support.
At the moment, at 1.1695 of the pair, there is a loss of 0.43% and the next support would be facing at 1.1679 (monthly low occurred on Oct.29) followed by 1.1612 (monthly low occured on Sep.25).
And 1.1495 was the endpoint (monthly high occur in Mar.9). On the other hand, there was a breakout of 1.1880 (monthly high occur on Oct.21) would target 1.1917 (high Sep.10) towards 1.1965 (18 Aug.monthly high).
EUR/GBP Remain Held below the Mid-0.9000
The EUR/GBP pair rallied more than 50 pips from two-week lows and updates daily tops, in the few last hours around the 0.9060 regions although a few pips of it quickly retreated later. The pair has once managed to find good support.
It is near the psychological 0.9000 figure and after the decision of the ECB has made, it gained some intraday traction. As anticipated, the main refinancing operation of the European Central Bank will be maintained by them.
Deposit facility and marginal loan facility at -0.5% and 0%, 0.25% respectively. Besides, the PEPP (Central Bank’s Pandemic Emergency Purchase Program) was left unchanged at $1.6 trillion (€1.35 trillion) and was reaffirmed that until at least June 2021, it will run.
There was also an accompanying statement that the strong indication was given by the ECB that it will likely increase the purchase program of its emergency bond so that the euro-area economy can be stabilized.
Post-meeting, in a conference, Christine Lagarde the ECB president said that there was approval from the Governing Council to recalibrates and take action to their policies in December in the next policy meeting.
She further added that until early next year there are forecast for inflation to remain negative that the short-term outlook has worsened. The ECB's commitment and dovish outlook to take action in December helped the EUR/GBP pair to bounce off lows and impacted the shared currency.
However, the tone offered around the British pound, amid the very broad-based USD strength and persistent Brexit uncertainty, limited the upside, somewhat pushing some selling higher.
Seen from a technical perspective, there was an intraday recovery stop near the resistance marked by the decline of the trend line within one week. This combined with strong horizontal support near the 0.9000 marks forming a descending triangle.
