The Euro took a beating yesterday after concerns that Germany could enter recession this quarter according to the Kiel Institute for the World Economy who downgraded its forecast for the country’s economic growth in Q3. Today, the ECB will announce its latest monetary policy. President Draghi said in July that the Eurozone’s economic outlook is getting worse and worse, setting the stage for a move in September. Thus, market participants are pricing in a rate cut by 10 bps and an announcement of a restart of the QE program worth EUR 30 billion per month from October. Despite the market has already priced in today’s dovish announcement, the official statement will likely hurt the Single currency in the short-term.
The Single currency bears took back control during yesterday’s session, after price pierced through the 50-day moving average and attempted to break below 1.10, setting the stage up for a possible further downside move for today. The sentiment weighs on the bulls as long as price remains below the 50-day moving average. A successful break below 1.10 could extend the losses towards 1.0965 or even retest the low of the year 1.0925.
Support: 1.10 / 1.0965
Resistance: 1.1065 / 1.1110