EUR/USD Falls 500 Pips In 24 Hours On ECB Stimulus

EUR/USD downtrend is going strong. EUR/USD downtrend started in May last year. Since then it has fallen more than 2500 pips. Last week EUR/USD fell 500 pips on the announcement that ECB is starting its bong purchasing program.

EUR/USD H1 chart

The euro plunged to an 11-year low as Mario Draghi rocked the market with a sovereign-bond buying program that exceeded forecasts.

The 19-nation currency fell versus 27 of its 31 major peers posted its biggest weekly drop in three years after the European Central Bank president outlined details of a $1.1 trillion euro ($1.23 trillion) stimulus plan. Denmark’s krone slid as that nation cut interest rates twice, while Canada’s dollar plunged on the first decrease in borrowing costs since 2009. A gauge of the greenback closed at the highest on record before the Federal Reserve is forecast to hold rates unchanged next week.

EUR/USD downside looks unlimited right now. It seems that EUR/USD will soon hit 1.00000 level and then go below it. As a EUR/USD trader it is always a good idea to trade this pir on the daily timeframe. This pair moves a lot on ECB policy announcements. Rest of the time it just keeps ranging. So it is always a good idea to trade this pair on the higher timeframes. The downtrend is strong and will continue for more months.

Market analysts now want to see some action by the FED too. The Federal Reserve could be key for Wall Street next week as investors get to hear from the U.S. central bank for the first time since a series of moves by its global peers, including the European Central Bank’s massive stimulus plan.

As you can see in the above EUR/USD H1 chart, price did rebound 100 pips up. For now it is a good idea to close your short trade. Wait for the price to hit the upper fast line and rebound back. This will be the best time to again enter into a short trade.