Euro Retreats on ECB Cut...

Source: Forexnews.com

The ECB, as largely expected, cut its benchmark lending rate by 50-basis points to 2.0%, its lowest level in 3-years. The euro was initially higher following the decision, rallying past the 1.32-handle, but subsequently relinquishing the 1.31-level to fall toward 1.3060.

Bank President Trichet raised the prospects for additional ECB rate cuts over the coming months in his press conference today. Trichet tempered expectations for a move in February but left the door open for another rate cut in March. He offered a downbeat assessment on the Eurozone economy, expecting weakness to persist in the coming quarters, with risks to growth on the downside.

EURUSD will encounter support at 1.3030, followed by 1.30 and 1.2950. Additional floors are seen at 1.29, backed by 1.2860 and 1.2830. On the upside, gains will target resistance at 1.3080, 1.3120 and 1.3170. Subsequent ceilings are seen at 1.32, backed by 1.3240 and 1.3270.