The Unified European currency gave way to the USD. The exchange rate of the pair EUR/USD fell down and reached the lows of 1.2510 on Wednesday. This situation was driven by publications on the problems of Eurozone. There is another factor that helped increase skepticism. Not all European countries pleased with the common decision to create an agency to supervise banking sector and use financial aid funds to recapitalize banks facing difficulties. In particular, Finland and Netherlands are against the use of the funds to reduce borrowing costs of Spain and Italy. “Bearish” sentiments increased because it is a day off in the US markets and volume of trade is low.
The pair is in the narrow channel of 1.2510 - 12545. The key event of today is announcement of the key interest rate level by the ECB. Most economists expect that it will be reduced by 25 basis points.
2. Important levels (Resistance and Support)
Today’s key level is 1.2575, if this level is broken down, the price can go to 1.2690. Resistance levels are: 1.2510 and 1.2445.
3. Best entry point
It is likely that the European currency will rise slightly against the USD, as expectations that the ECB will reduce interest rate shall be justified. Although this news is very significant, expectations have already been incorporated into the price, which means that rapid growth is unlikely. Best entry point is 1.2540. In case of alternative scenario, if the ECB leaves interest rate unchanged, the pair will go down and orders for sale can be placed at the level 1.2505.