Whilst it appears that the U.S is slowly creeping through to a recovery, the Eurozone has struggled. Much of the U.S recovery can be attributed to the Fed’s unprecedented quantitative easing program. The ECB has avoided such bold monetary policy measures, but with consistently poor economic data reflecting stalling economic growth, is it time for the ECB to act?
Investors Notes: A long-term downward movement in EUR/USD.
- The ECB has suggested a monetary stimulus program could commence at the 5th June ECB meeting.
- The dollar continues to drop on the back of lower interest rates; a weaker dollar makes a more aggressive ECB stance, more likely.
- Economic data released from Eurozone continues to disappoint; EU PMI, the Current Account and German PPI all either fell or came in below forecast.
- From a technical perspective, the EUR/USD broke below the psychological 200 day moving average providing a significant sell signal.
- The EUR/USD ended the week at 1.363, which is strong sell-zone.
- Banc De Binary analysts predict the ECB will be forced to act to lower the EUR/USD, hence, a potential downward movement in the Eurodollar is expected.