Thursday ended with the EUR/USD being high above of local resistance of 1.10. What's the target now?
Volatile Monday: Fed and RBNZ cut interest rates
As the situation with coronavirus got worse during the weekend, the Federal Reserve and the Reserve bank of New Zealand cut their interest rates in response to the treats to global economy.
The eventful Sunday began with the Reserve bank of New Zealand slashing its interest rate by 75 basis points to 0.25%. Against the USD, the New Zealand dollar has tested the 0.6 level on the announcement.
Just two hours later, the Federal Reserve also cut the interest rate, moving it within the range of 0-0.25%. In addition, the regulator softened the loans conditions for the banks, i.e. increased the length of the discount window to 90 days and reduced reserve requirement ratios to 0%. To boost the economic conditions, the Fed launched a new round of quantitative easing program in $700 billion.
The surprising news pulled EUR/USD lower at first to the 100-period SMA at 1.11 on H4, but then the pair inched up to 1.1212.
What does that mean?
Basically, the situation is not getting any better, and the central banks try to do their best to response the uncertainties surrounding the virus outbreak. Up next we will hear the breaking announcement of the Canadian government later today, the comments by the EU finance ministers, and the G7 video conference at 16:00 MT time. Follow the news with us to be updated on the events!
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