European Central Bank Shifts Gears
The European Central Bank (ECB) shifted gears at its meeting this morning by acknowledging slowing growth in its economy. This is the same story we've been hearing from the Federal Reserve in the United States. Earlier in the week, the Reserve Bank of Australia made some similar remarks. After this morning, therefore, the ECB has joined the trend of warnings from central banks.
The reaction by the forex market was to sell the euro. But the euro was already down quite a bit in the last few weeks going into this morning's ECB meeting, which is why we didn't see a bigger reaction to the shift in language.
Looking at the EUR/USD, it's now back down to relative lows within its multi-month trading range. A breakdown is likely, as measured by a drop to 1.5200. But the risks of a bounce are growing by the day. That's why I'm not shorting the EUR/USD at this point and, instead, waiting for a better entry point from a risk management perspective.
Eric
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