5 September 2014

Today NFP was worse than expected, BOE kept the rate unchanged, while the ECB unexpectedly cut the benchmark interest rates by another 10bps to new record low of 0.05%. Correspondingly, it also lowered the bank overnight deposit rate to -0.2% and the marginal lending rate to 0.3%. The ECB would start purchasing asset-backed securities and covered bonds in October. ECB has an inflation target of 2.0%.

EU dropped 200 pips from 1.3150 to 1.2940. Yesterday short was closed at 1.2970. More downside expected.
Daily - Previous day candle closed with a big engulfing bearish candle, below 8 lwma, RSI below 30.
H4 - Lower low, below 8 lwma, RSI below 30, below signal. The drop broke through W S1, S2 and S3 level. Next support is at 1.2900.

GU dropped from 1.6460 to 1.6330 after ECB decision. More downside expected.
Daily - Previous day candle closed with another big engulfing bearish candle, below 8 lwma, below 200 EMA, RSI below 30.
H4 - Lower low, below 8 lwma, RSI below 30 with bullish divergence. W S3 1.6470 was broken, next clustered support at 1.6250.