European markets shook overnight as the ECB announced plans for further Eurozone stimulus. European Central Banker Mario Draghi’s aggressive easing package included plans to increase the QE program by an extra 20 Billion EUR per month and cut the headline interest rate to zero. The Bank has struggled to achieve the demand needed to reach inflation targets, with forecast inflation having fallen from 1% to 0.1% over the last three months.
Both the FTSE and the DAX closed in the red 1.78% and 2.31% respectively as markets digested the announcement. The EUR dropped to a low of 1.08213 upon release of the news, however rallied to 1.1217 amid comments made during the press conference. Draghi managed to unwind the desired EUR weakness as he outlined the ECB does not anticipate the need for further cuts to interest rates. Analysts believe despite the increase in stimulus, without improvements in structural reform and aggressive fiscal policy the ECB is approaching the limits of its ability to stimulate the economy.
Gold surged to $1272 overnight as uncertainty over ECB’s announcement pushed investors to risk-off assets. The precious metal had experienced some significant retracement over the last few days hitting a low of $1236.88 as markets believed the prolonged rally was unsustainable. Gold bulls will be looking to the Fed meeting next Thursday for further price direction.
Currency Updates:
EUR/USD Intraday: turning up.
Pivot: 1.1030
Our preference: long positions above 1.1030 with targets @ 1.1240 & 1.1294 in extension.
Alternative scenario: below 1.1030 look for further downside with 1.0930 & 1.0820 as targets.
Comment: the RSI is mixed with a bullish bias.
Supports and resistances:
1.1370 **
1.1294 **
1.1240 ***
1.1179 Last
1.1030 ***
1.0930 **
1.0820 ***
USD/JPY Intraday: under pressure.
Pivot: 113.40
Our preference: short positions below 113.40 with targets @ 112.20 & 111.96 in extension.
Alternative scenario: above 113.40 look for further upside with 114.25 & 114.50 as targets.
Comment: the RSI is badly directed.
Supports and resistances:
114.50
114.25
113.40
112.93 Last
112.20
111.96
111.63
GBP/USD Intraday: bullish bias above 1.4220.
Pivot: 1.4220
Our preference: long positions above 1.4220 with targets @ 1.4335 & 1.4390 in extension.
Alternative scenario: below 1.4220 look for further downside with 1.4130 & 1.4070 as targets.
Comment: the RSI is mixed with a bullish bias.
Supports and resistances:
1.4455 **
1.4390 ***
1.4335 ***
1.4297 Last
1.4220 ***
1.4130 ***
1.4070 **
AUD/USD Intraday: rebound expected.
Pivot: 0.7430
Our preference: long positions above 0.7430 with targets @ 0.7530 & 0.7560 in extension.
Alternative scenario: below 0.7430 look for further downside with 0.7410 & 0.7385 as targets.
Comment: the RSI is mixed with a bullish bias.
Supports and resistances:
0.7595
0.7560
0.7530
0.7435 Last
0.7430
0.7410
0.7385
SPI 200 (ASX) (H6) Intraday: rebound expected.
Pivot: 5120
Our preference: long positions above 5120 with targets @ 5210 & 5245 in extension.
Alternative scenario: below 5120 look for further downside with 5075 & 5040 as targets.
Comment: the RSI is mixed and calls for caution.
Supports and resistances:
5300
5245
5210
5135 Last
5120
5075
5040
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