The Euro tumbled against the dollar in the early afternoon as the European Central Bank suggested implementing corporate bond purchases in order to spur the flailing Eurozone economy. The report stated that the ECB could indeed activate the bond buying program as early as December which is bad sign for the Euro.
It is important to state that the European Central Bank started buying covered bonds on Monday in order to infuse liquidity into the system. The Euro then climbed higher against the dollar in the early half of the session after positive Q3 GDP data came out from China, with it being one of the biggest trading partners for the Eurozone economies.
Traders would be wise focus their attention on the US Existing Home Sales data that will be released in the latter half of the day (13:30 GMT) which will cause the currency pair to move.
When looking at the hourly chart, the EUR/USD is currently facing resistance near $1.28281 with support for continuing to remain near $1.27373. The selloff has meant that the currency pair has slipped below its daily moving averages, which is a bearish sign.
The momentum indicators additionally have given a fresh sell signal, indicative of a shift in momentum towards the sell side. Similarly, the relative strength index for the currency pair has given a sell signal and currently shows no signs of a reversal, indicating that bears have the upper hand.
Short the EUR/USD at current levels for an intermediate target at $1.268400, with a strict stop loss above $1.27983
Long the EUR/USD if it moves above $1.27983 for a short-term target at $1.28380, with a strict stop loss below $1.27686