The euro is gaining against most currencies, with the EURUSD pair increasing by 0.30% following information that the European Central Bank (ECB) is allegedly preparing to introduce a strategy to manage the excess liquidity in banks, which currently stands at about 3.5 trillion euros. The above strategy is expected to be the main point of the next ECB meeting regarding interest rate decisions, which will take place on October 26 in Athens.
According to several insiders closely associated with the ECB, to whom Reuters reached out, a potential strategy could involve raising the mandatory reserves of banks from the existing 1% of customer deposits to a range of 3-4%. This adjustment aims to help curb inflation, which, despite ten previous rate hikes, consistently exceeds the 2% target, and also to reduce the interest expenses of central and national banks on deposits, which are a loss-inducing factor.
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From the perspective of the D1 interval, the sentiment on EURUSD remains bearish. Recently, the rate broke below the key support level at 1.0750, which should now be treated as resistance. This point arises from the breached 1:1 geometry and the trend line. In the event of a continuation of the movement to lower levels, the 1.0630 and 1.0530 levels should be treated as support.
As for the H1 interval, we observe an attempt to break the key short-term resistance at 1.0860, resulting from the minimum of September 7 and the 1:1 geometry (red rectangles). In case the upward movement continues, attention should be paid to the resistance at 1.0705, and then the zone 1.0750-1.0760.