EUR/USD has been trading within a tight range over night, and several attempts were made to break through the $1.24 level, but the confidence was lacking. The poor uptake of the TLTRO is still hanging over the euro, and traders are looking to the European Central Bank for additional stimulus.
In my opinion the uptake of €129.84 billion was enough to dispel QE speculation in the near term but it wasn’t high enough to totally eradicate it. The ECB bulletin pointed out that the purchase of covered bonds and ABS will last for another two years, and traders can expect an additional six rounds of TLTRO’s between now and June 2016.
The eurozone industrial production and the University of Michigan consumer sentiment at 10am and 2.55pm (London time) respectively, are the economic highlights of the day.
The downward trend on EUR/USD remains intact, but some of the pressure has come off the single currency as QE chatter has cooled. The $1.23 level remains the target to the downside and any rallies are likely to run into resistance at the 50 day-moving average of $1.2510.