Following ECB’s decision to announce a massive, open-ended, €750 billion asset purchase programme in an effort to mitigate the economic impact of the virus outbreak, the EUR/USD has nosedived. Already under pressure because of a rallying US dollar, this package was the final nail in the coffin for the single currency. If it stays below 1.08 on a daily closing basis then more losses could be on the way in the days ahead amid technical selling pressure given the lower lows and lower highs.
The EUR/USD’s drop should not come as a surprise if you are a follower. It has fallen exactly how I thought it would the day before in THIS article. Here is an updated chart:
With the monthly candle now looking very ugly, don’t be surprised if this turns into a long-term meltdown going forward. However, as mentioned, if rates go back above 1.0800, then it would complicate the technical outlook for this could create a possible false break bullish reversal pattern. Let’s wait and see now, as the sellers’ main objective has already been met: liquidity below recent lows at 1.0778.
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