As expected, the ECB announced that the bond buying and money creation done by the central bank will continue. Namely, there will be a lot more Euro in circulation than at the moment.
So as there is more of something, it is worth a lot less. To be exact, the EUR/USD dropped by 1.15% due to the confirmation of what the market already expected.
Meanwhile, congratulations to all the traders who were short before this move. In general, around 70% of the total open positions were short on the Swiss Foreign Exchange since the start of Marc. These people in most cases have caught around 200 pips.
US and Canadian employment at 13:30 GMT
On Friday, Canada and the US will publish their monthly employment data sets. It has five important data sets impacting the USD/CAD. It is the most complicated one to work with, as each data set impacts the rate differently.
As you wait for that announcement, watch the yesterday's ECB announcement cover by clicking on the link below.
EUR/USD hourly chart's review
On the hourly chart the various supporting technical levels have been broken. A fundamental change in the money supply like on yesterday, of course, ignores all technical levels.However, a trend line of a large scale channel down pattern actually managed to stop the decline at 1.1180.
The event has resulted in a surge, which is also consistent with the fact that after the recent sharp drop the rate has to retrace back upwards. Namely, the market looks for the new price, and short term speculators take profits from the decline.
Hourly Chart
On the daily chart the pattern, which stopped the ECB drop can be observed better. However, note that it is located in the middle of a large scale descending pattern.
Meanwhile, take into account that all the daily simple moving averages have remained far above the currency exchange rate. It is a signal that the rate is oversold.
Better ignore this technical signal, as the currency supply is changing. The SMAs can be used in an environment, which does not have such news.
Daily chart
On Thursday, 69% of trader open position volume on the Swiss Foreign Exchange were short on the EUR/USD.
On Friday, this number was at 63%. It means that a part of the EUR/USD short traders have closed their short set ups and taken profits. However, the rest are still sticking to the trade in case the decline continues.
In the meantime, trader set up pending orders in the 100-pip range were also short. Namely, 64% of pending orders were set to sell.
Although some have taken profits, the sentiment and orders still indicate that traders are bearish. It can be understood simple.
The announcement of the increase of EUR in circulation has been made, but it is still set to occur. That should bring the EUR/USD even further down.