The euro continues to weaken. This morning the single currency dropped back below 1,18 dollars for the first time since 30 December 2005, reaching a low of 1,1791. The decline was brief (after a few minutes the exchange rate repositioned itself at 1,18), but it confirmed that the Community currency's downward trend is destined to continue (yesterday two important support levels were broken in rapid succession, at 1,1860 and 1,1825), on the back of expectations for the Quantitative easing that the European Central Bank could launch this month.
Market expectations strengthened after the survey published yesterday by Eurostat on price trends in the Eurozone in December, which highlighted for the first time a descent into deflationary territory. In the light of these data, on which the recent collapse in oil prices has weighed above all, it is even more likely that the ECB will change its new stimulus program as soon as possible, which consists in the massive and generalized purchase of private and public securities, excluding those related to gold.
The breaking of the last supports of the euro, according to some graphic artists, could have opened the way for the market to search for more distant support quotas, in the $1,1640 area, i.e. on the lows of 2005.
