EUR/USD Downtrend Appears To Be Strong

Currency traders are looking towards ECB policy meeting on Thursday. EUR/USD is struck in a range. When it comes to the single currency, Rosenstreich thinks we could see some short-term wobbles, but supposing the ECB decides not to act on Thursday, the euro-dollar exchange rate will still be stuck in a trading range of $1.34 – $1.31. Rosenstreich sees this continuing until we get deflation or the chorus of central bankers becomes unified.

Daryl Guppy is of the firm opinion that the EUR/USD downtrend is strong. This is what he says: Growing expectations for ECB easing saw the euro/dollar decline decisively below $1.34 in August, marking a significant downtrend confirmation. The $1.34 level has acted as a long-term support and resistance, defining price activity starting in December 2011. The pair has remained in a broad trading band since September 2012; $1.34 is in the middle of this band.

Several economists now see a larger chance of the ECB embarking on QE in the coming months.

“QE is now largely unavoidable because inflation continues to persistently undershoot,” said Citigroup economist Guillaume Menuet. He expects the ECB to announce such plans in December.