Currency Analysis Report 12-14-18...European QE Soon Ending, But...
The European Central Bank decided on Thursday to formally end its 2.6 trillion euro ($2.95 trillion) bond purchase, but but said it would keep reinvesting cash from maturing bonds for a long time after its first interest rate hike.
The bond purchases, known as quantitative easing (QE), were launched four years ago to support inflation and growth in a crisis-hit euro zone. The ECB said it sees QE offering little further benefit, however, and is focusing on other tools to support the economy.
Draghi repeated the list of risk to the growth and monetary policy outlook mentioning protectionism, emerging markets vulnerability, geopolitical risks, and financial markets volatility. As a result, QE remains a tool for the ECB and it will re-use it, should the situation justify the move.
This morning, PMI in France fell to 49.3 in December from 54.2 in November. This is the first time since June 2016 that the reading has fallen below 50.0--the threshold that points to a drop in activity. And in Germany, the PMI fell to 52.2 from 52.3 in November, reaching its lowest level in four years.
So where is the Euro headed, lets go to the charts?
Monthly Chart (Curve Timeframe) - Monthly demand is at 1.0550 and monthly supply is at 1.1800.
Weekly Chart (Trend Timeframe) – the trend is down and slowly approaching the weekly demand at 1.1150.
Daily Chart (Entry) – price has been range bound, quite frankly, the price action has been real ugly. One could also paly the range if that's your style as well. I would suggest to stay away from this currency until it at least hits the weekly demand.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
