The common Euro currency is strengthening against other majors as the market feels optimistic over the ECB’s monetary stimuli. The voting is scheduled for tomorrow.
Last week, Mario Draghi, President of the ECB, announced that the ECB was determined to defend the eurozone and its currency. The optimism suggests that speculators expect the ECB to take efficient steps aimed at resolving the continue eurozone crisis.
EURUSD managed to recovery up to 1.2300 and then rallied higher up to 1.2390 last week. EURJPY also recovered 0.5% during today’s Asian trading session.
The forthcoming ECB meeting may well have a major impact on the escalating eurozone crisis. However, the ECB has few tools for helping risky European banks and purchasing the bonds emitted by the eurozone’s weakest economies.
The European market of bonds seems to be showing first signs of stabilization. The Spanish short-term bond yield fell below 7% down to 6.75% yesterday, which is 1% lower than the all-time high set on July 25th (7.75%).
At the same time, the US Dollar is currently unable to resist the strengthening of the Euro because of the rumors that the Federal Reserve will start another round of quantitative easing, thus expanding the money supply and making the US Dollar weaken. It should be noted that the FRS spent $2.3 trillion on QE1 and QE2 in 2008-2011.
According to , EURUSD is currently trading within the 1,2041-1,2389 price range. The closest level of resistance is the local high - 1,2389. If the price breaks and consolidates above it, the rally will continue. Alternatively, the closest level of support is 1,2248. If the price consolidates below it, it may well resume the recent downtrend.
