The euro tumbled to a three-month low after the ECB meeting last night, as the central bank disappointed market participants with a decision to extend its QE program until 18 September, with no clear sign of when tapering will start. 

Meanwhile, the ECB’s monthly asset-purchasing amount will be halved to 30 billion euro from the current 60 billion euro. Mr Draghi also expressed a dovish-biased statement, saying that the central bank reserved the right to boost QE if economic conditions should change. 

Traders dumped the euro and bought the dollar as they can’t see the end of quantitative easing in the eurozone until end of 2018. Expectations of ECB tapering have been quickly unwinding over the past 12 hours. Technically, EUR/USD has broken down below the key support level of 1.1723 with a long-range bearish bar forming last night. Trend indicators 10-Day Simple Moving Average and SuperTrend (10,2) are both trending downwards, suggest that the bearish side is taking control of the momentum. 

Nasdaq futures were trading sharply higher during Asian hours, as US technology giants (namely Alphabet, Intel, Amazon and Microsoft) smashed analysts’ forecasts with earnings surprises. Alphabet, Microsoft and Amazon’s share prices surged 3%, 3.6% and 8% respectively in after-hours trading. Favourable earnings have brought positive sentiment across Asian markets, with most futures markets opening higher.

Tonight’s US GDP data will be watched carefully by investors to assess the resilience of the US economy against the backdrop of two disastrous hurricanes in the third quarter. The market expects the economy to expand at an annualised pace of 2.5%, a slight revision down from the previous quarter’s reading of 2.6%. Stronger-than-expected GDP readings will further boost investor confidence and probably boost the dollar rally. Worse readings, however, will likely do the reverse. The GDP reading will come out at 8.30pm Singapore time. 

Technical Analysis:

EUR/USD

  • The 10-Day Simple Moving Average and SuperTrend (10,2) both sloping downwards
  • The Fibonacci Extension suggests the price is challenging the 61.8% level at the 1.163 area. Breaking down below this level will open room for further downside toward the next support at the 1.156 area
  • The bearish long-range bar formed last night suggests strong downward momentum

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