EUR/USD drops to 100-DMA on threat of negative inflation

By FXStreet FXStreet (Mumbai) – The offered tone around EUR/USD strengthened further, pushing it lower to its 100-DMA located at 1.1110 after ECB President Draghi expressed a possibility of negative inflation in the short-run.

Euro offered on hopes of more QE

The lower inflation and GDP forecasts and Draghi’s comments about negative inflation appear to have pushed up bets of an increase in the size of the ECB’s QE (currently EUR 60 billion per month). Moreover, Draghi expressly stated that their program has enough flexibility in terms of size, compositions and duration.

Meanwhile, the mixed US data – rise in weekly jobless claims and slight drop in the trade deficit – got completely overshadowed amid Draghi’s comments.

EUR/USD Technical Levels

The spot currently trades at 1.1110. The immediate support is located at 1.1082 (50-DMA), under which the spot could extend the drop to 1.1052 (Mar 26 high). On the other side, resistance is seen at 1.1155 (Aug 28 low) and 1.1243 (daily high).
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Source:: FX Street