EURUSD: Euro tanking after ECB QE announcement. 1.1200 coming up then 1.10 – and lower by FX Charts

After leaving rates on hold, the ECB Mario Draghi duly announced that the ECB will begin its QE programme by buying Eur 60bio in assets per month in March, until September 2016, totalling around Eur 1 trillion and which will include government bonds, debt securities issued by European institutions as well as private-sector bonds.Following a brief squeeze to the session high of 1.1650, the Euro has since collapsed to a low, so far, of 1.1362, (now at 1.1315) and although oversold in the short term, looks to have plenty of downside potential yet to come.

In reaching the day’s low, the Euro has met the initial objective, after now having reached the (Nov 2003 low) with the next target being the major Fibo support at 1.1227 (61.8% of 0.8225/1.6037), with precious little elsewhere to hold it up ahead of there. That should be decent support and may hold it here for a while, but if broken, the next target will be at 1.1000, where many analysts have been looking for a 2015 low, although the next realistic technical level is not seen until the September 2003 low at 1.0759.

Rallies look to be rather limited, although the market is heavily weighted to the downside so we are going to get the odd short squeeze along the way. Above 1.1400, the first hurdle will be at 1.1460, last week’s spike low, and then at 1.1540, which held the Euro up for the first half of yesterday’s session. The descending trend resistance is now at 1.1565, and although this looks unlikely to be tested today, it will come under pressure at some stage over coming sessions as it heads lower.

In the meantime, there may be no let up on the downside for the Euro today, with the release of the EZ Flash Mfg PMI’s, which will be followed over the weekend with the Greek election, where a left-wing victory is looking increasingly likely.

Stay short and sell rallies still seem to be the theme. Personally I think parity is looming and beyond that, I think we are heading to 0.8000, but this maybe a 2016 trade.

Economic data highlights will include:

EZ Markit Flash Mfg PMI’s, Chicago Fed National Activity Index, CB US Leading Indicator, Existing Homes Sales.

…