Disliked{quote} EURUSD update => long long wick in play on W chart as expected => via very loud noise in financial newspapers ECB is ready to deliver as expected : 1) a 10bp cut on deposit rate (from -0.50% to -0.60%) 2) and, the real deal, an increase in private bonds purchase via their Corporate Sector Purchase Programme (CSPP) : Increase by €20bns/month minimum + extension of eligibility...Ignored
That would put global asset purchases around €60bns/months if confirmed. In other words, nearly as much as QE1.
That would guarantee a further and sharp retrace until next week's FOMC (huge) expectations enter in play. That's obviously very big but that would leave ECB with a nearly empty toolbox for the future (QE1's peak, reached in 2016, was €80bns/month) and, maybe more important, that will raise questions about what kind of bonds they are ready to buy... So it looks a bit doubtful to me. Are they so scared of what FED is cooking for next week as it could send EURUSD to very unhealthy levels for some EZ exporting economies (the ones set to be most affected by covid19 international trade's shock) ?
In any case, imo, min flow for the retrace is 1.122x, with the mildest expectations, ie. + €20bns/month (cf. previous post), I would be very happy with 1.109x, and, with a QE1 like, 1.099x/1.101x area (Previous ST Bottom & Current MT Bottom) looks the minimum flow, before next week's FOMC expectations take the upper hand.