In the European Central Bank's second round of targeted long-term loans Euro zone financial institutions borrowed less than expected, complicating the central bank's balance sheet expansion goal. Altogether, 306 banks took up 129.84 billion euros in the auction, more than they did in September but considerably below analysts' expectations. The cheap, long-term loans from the Frankfurt-based central bank to Euro zone banks are part of the ECB's easing package, which is aimed at boosting lending in the currency bloc, spur growth and lift inflation. Coupled with purchases of asset-backed securities and covered bonds, the ECB plans to expand its balance sheet by almost €1 trillion to €3 trillion by late 2016. However, following the weak uptake in the TLTRO, pressure has been increasing on the ECB to eventually deploy full-blown quantitative easing if it is to achieve its goal to expand the balance sheet to near March 2013 levels.
Meanwhile, Greece's unemployment rate fell again in September, declining to 25.7% from a revised reading of 26.0% a month earlier. Nevertheless, the job market improvement is stubbornly slow and Greece's jobless rate is still the highest in the Euro zone, despite third-quarter GDP growth of 1.9%, the best result since 2008. Greece brought forward its presidential election by two months, in an attempt to end political uncertainty, following the Eurogroup's approval of Greece's request for a two-month extension to its bailout program.
Beginning of next week to have no major fundamental drivers for Euro
As it usually happens, Monday will bring no important news from around the world in order to influence the European currency significantly. According to economic calendar, there is no news expected from the Eurozone on the first day of the next week. However, the EUR/USD cross may be slightly influenced by statistics from North America, including industrial production data, as well data Fed's net long-term TIC Flows.EUR/USD to trade around 1.24 during next few days
The long-term outlook for the EUR/USD remains bearish, even though the currency pair has recently breached the long-term downtrend line, which used to be a considerable resistance for the cross. Moreover, it has reached the December high at 1.2494. However, any negative impetus will push the cross down below this important level, with a long-term goal located at 1.2246 (2014 low) for the time being. From the upside, the next major supply zone is placed around the 1.26 level (23.6% Fibo, Bollinger band, 55-day SMA). Nevertheless, we would assume the EUR/USD pair is going to consolidate around the 1.24 mark for some period of time.Daily chart
The most traded currency pair made a slight correction to the downside after a three-day long bullish move. The pair went back below the weekly R1 and 20-day SMA to close the yesterday's trading session just above the long-term downtrend line at 1.2409. We assume that there is a possibility of this important level to be crossed soon and the single currency is going to depreciate further, with the short-term target represented by weekly PP at 1.2352.
Hourly chart