Euro traders await the announcement of a new ECB President
The euro currency traded back under its 200-day moving average against the U.S Dollar on after EU leaders delayed the announcement over the new European Central Bank President. European leaders failed to come to an agreement on a number of other top position within the European Union, forcing the EU summit to be suspended until later today.
Many political analysts had expected the announcement of the ultra-hawkish central banker, Jens Weidmann, to replace the outgoing ECB President Mario Draghi. EU leaders failed to agree on Weidmann, with calls now growing from France and Italy that the top position at the ECB should, in fact, be given to a woman.
IMF Managing Director Christine Lagarde is said to be amongst the top candidates being considered for the position, although she is known best for her skills as a lawyer. Other top male names being considered for ECB President are French central banker Benoit Coeure and Oli Rehn, the head of Finland’s central bank.
Euro traders will have to wait until the other top European jobs are allocated before the new ECB head is announced, according to an official statement on Monday. The prospect of ultra-hawkish Jens Weidmann taking the top-job could propel the euro currency across the board, as he is adamantly opposed to money printing.
Madame Lagarde is likely to be more on the dovish side and would be more sympathetic to QE and other forms of policy stimulus if needed. EU PMI data out on Monday highlight the current weakness in the EU manufacturing sector, with the Spanish manufacturing PMI falling in negative territory, while the United States announced fresh trade tariffs on some European imports, sending the EUR/USD lower.
EUR/USD Mountain Chart | Source: ActivTrader
The EUR/USD has fallen sharply since moving above the 1.1400 level last week, leaving the pair on soft-footing below the key 1.1300 support level. Critical weekly support is now located at the 1.1255 and 1.1220 levels. Bulls will need to move the EUR/USD back above the 1.1310 level to inspire confidence that the pair is starting to attract a meaningful bid.
Written by Nathan Batchelor, External Analyst, ActivTrades
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