The EURUSD pair has been trying to form a base over the last couple of days as the hit that it had taken due to the hawkish stance of the ECB with regard to the tapering and ending of the QE seems to continue to have a large impact on the markets over the last few days. This is expected to continue in the short term though we believe that the region around 1.15 should offer some decent support for now.
EUR/USD Finds Support
The region around 1.15 is not only a region where there is a lot of buying, it is also a round figure and hence likely to attract a lot of buying. We have also seen that this region has been the target of many of the bears over the last few weeks and hence the achievement of this target, with ample help from the ECB, should help the bears take profit and this should alleviate the selling for now.
We believe that the pair would continue to consolidate and range between the 1.15 and the 1.18 regions for the short term as we watch the ECB very closely on its moves over the next few weeks with regard to the tapering. The ending of the QE has been pushed still far ahead and this should lead to ample supply of euros in the market and though this is likely to help the stock markets, this is not good news for the euro and that is why we have seen the large fall.
We are also likely to see the Fed continue its hawkish stance with regard to the rate hikes and this is only going to add even more pressure on the euro in the coming months as the Fed decides to hike a couple of more times in the rest of the year. Looking ahead to the day, we expect the consolidation to continue with it being the first day of the week.