FX News – November 25: ECB Negative Rate Talks Drags Down EUR/USD

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While the EUR/USD ended on a positive note last week, it began sliding once again after ECB governing council member Ardo Hanson talked about negative deposit rates, which was further fueled with the same talk by another governing council member Christian Noyer in Tokyo this Monday. Both said that the ECB would maintain rates or even cut it further should the Eurozone's deflation problem persist. Early in November, the ECB cut rates by 25bps, which brought down interest rates in the region to 0.25%.

These talks caused the EUR/USD to slide from its highs at the 1.3550 zone over the weekend to 1.3510, before making a recovery at the 1.3525 zone over the past few hours. The pair is currently trading at 1.3523, with initial resistance seen at 1.3598, followed by 1.3632. Meanwhile, initial support is at 1.3505, followed by 1.3471.

The USD/JPY continued its momentum at the opening of the Asian session as it reached highs near the 102.00 mark. However, it lost steam around the European session, and has remained at the 101.75-101.80 areas at the moment. The pair is currently trading at 101.78, with initial resistance seen at 101.56, followed by 101.82. Meanwhile, initial support is at 101.14, followed by 100.88.

The effect of RBA Governor Glenn Stevens' talk about a possible currency intervention  continued to persist today as the AUD/USD pair slid further near the 0.9120 zone. In addition to that, a stronger greenback has also played a key role as there are growing talks that the US Fed will begin its taper this December.

However, the pair had a welcome respite over the past few hours as it is slowly erasing much of today's losses. The pair is currently trading at 0.9163, with initial resistance seen at 0.9209, followed by 0.9232. Meanwhile, initial support is at 0.9099, followed by 0.9077.

By FX Strategy Team, Published on 25th of November 2013
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