FXStreet (Mumbai) – The single currency erased gains against the greenback witnessed during the early Asian session on fears that the take-up of the European Central Bank’s (ECB) second tLTRO would be weak.
The EUR/USD pair traded largely unchanged at 1.2448 levels, after falling-off from a high of 1.2495 hit earlier today. Moreover, the markets are concerned that a smaller LTRO allotment today would invite a more aggressive stimulus measure from the ECB in the near future. The RBS European credit research team expects a take-up of EUR 120-170 billion, which is well below the maximum allowable EUR 318 billion. Thus, a smaller balance sheet expansion today will necessitate larger expansion of the balance sheet later.
Meanwhile, a revision to the flash German PMI reading for October is also due today. The data is expected to come-in line with the flash print of 0.6% year-on-year. A weaker than expected print would further weaken the EUR/USD pair.
EUR/USD Technical Levels
The pair has an immediate support located at 1.2444, under which losses could be extended to 1.2395 (5-DMA). Meanwhile, a breach of immediate resistance located at 1.2495, may take the pair higher to 1.2545 (50-DMA).