EUR/USD spikes amid Draghi comments

Source: Dukascopy Bank SA
  • SWFX market sentiment is 59% bearish
  • 52% of pending orders in 100-pip range are set to BUY
  • 59% of traders are bullish on the Dollar
  • Upcoming Events: Empty day

An announcement of the EU Minimum Bid Rate and the subsequent remarks delivered by Mario Draghi once again led to sharp advance of the currency pair. In fact, yesterday the Euro reached two and a half year high. Most probably, today the surge will continue towards the monthly R1 at 1.20 by inertia.

EUR/USD revealed muted reaction on the ECB rate announcement ahead of the Central Bank's policy statement. . However, the first half an hour of the Mario Draghi speech put the European single currency 72 pips higher against the US dollar, while the further course of press conference managed to keep the Euro above the 1.2000 level. 

The ECB President Mario Draghi noted that volatility in the Euro exchange rate was a source of unclarity, causing the necessity to monitor the FX rate impact on price stability being very important for inflation targets and growth. Mr. Draghi stated that underlying inflation trends had improved, but continued to be relatively subdued, while confidence surrounding the future economic growth remained strong.

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Silent day after major release



After a notable data release from the European Central Bank, the last day of the week is expected to pass quietly on both sides of the Atlantic.  

In the meantime, traders are advised to closely monitor movement of the Irma hurricane and try to determine its impact on the value of Dollar once it will reach the coast of Florida.



EUR/USD surges as Draghi speaks

In result of announcement of the EU Minimum Bid Rate as well as the subsequent Mario Draghi press conference, the Euro expectedly broke to the top and appreciated against the Greenback by 1%. Today, two scenarios might happen. 

First, once the markets will calm down the buck might make an attempt to recover, thus dragging the pair back to the weekly R1 at 1.2013. But most likely the currency rate will continue the surge towards the monthly R1 at 1.2099. 

If this target will be reached, the will be another two options. Either the pair will make a rebound from the upper trend-line of a medium-term ascending channel, or it will continue to soar in a junior ascending channel towards the northern boundary of a long-term formation.

Hourly Chart



As it was expected, the currency pair used the support provided by a bottom trend-line of a senior ascending channel to jump to the top. However, from a daily perspective the situation is not as clear as it may seem.  

On its way to the north, the currency pair faces three resistance levels. The first one is the monthly R1, the second one is an upper resistance line of a supposed rising wedge and the third one is an upper boundary of a dominant channel. So, the further movement of the rate will depend on which of those barriers will be stronger.

Daily Chart




Traders still bearish on the pair

The SWFX market sentiment slightly increased since yesterday and now is 59% bearish. In the meantime, the outlook for the Euro is 62% bearish, while for the Dollar 59% bullish.

Traders of OANDA remain bearish, as 65% of open positions are short. Meanwhile, SAXO are also bearish on this currency pair with 62% of open short positions.


Spreads (avg, pip) / Trading volume / Volatility

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