Chart of the Day: EURCHF
The European Central Bank delivered a package of easing measure to the market largely in line with expectations, with the deposit rate cut 10bp to -5bp — a resumption of asset purchases (QE) and more generous terms for the quarterly targeted long-term refinancing operation (TLTRO).
Importantly, the QE program was detailed as lasting for “as long as necessary,” which was initially seen as a EUR negative driving the EUR sharply lower against all G10 currencies. But as ECB President Mario Draghi spoke, we saw a strong bullish reversal in the EUR, with Draghi giving the firm impression that rates weren’t going any lower. EU interest rate markets (EONIA) led the EUR move, pricing out further aggressive easing over the coming 12 months. While it wasn’t overly aggressive, the market heard a central bank that’s reached the limits of monetary policy, and the baton is firmly turning to the governments and a future fiscal response. They may be waiting for some time.
EURCHF has been a setup on the radar all week, with price breaking the May downtrend and finding sellers into the 25 July low. If 1.0962 gives way, I feel this pair heads into 1.1060 in a fairly rapid fashion.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information provided here, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
Ready to trade?
Get started with your Pepperstone account today.