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Predrag V

EUR/USD

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Hi Predrag, thanks for the question. 

EUR/USD recorded today one of the best days recently by surging nearly 1% to test the zone around $1.10. 

Fundamentally, all eyes are on Germany.  A possible ruling of the German constitutional court that would ban the Bundesbank from taking part in the EU's QE has made the European Central Bank (ECB) start working on the contingency measures. If fears become reality, the share allocated to Bundesbank is likely to be taken by the ECB.

Legally, the ECB could get on with the QE without the Bundesbank. However, the market is likely to take this situation very seriously. 

“There is no doubt that such a step would shake the market’s confidence in the ECB’s ability to do ‘whatever it takes’ for as long as it takes. Spreads might widen again and risks to financial stability would rise,” said Marco Annunziata, a member of the ECB’s Shadow Council and the European Council of Economists.

Hence, EUR/USD may continue to trade in the shadow of fundamental events. With today’s rally, EUR/USD price has entered the key resistance zone that consists of four different resistance levels - from $1.0960 to $1.1010. A break of this zone opens the road for much higher levels, with $1.1150 as the next target.


 

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