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EURUSD Tumbles as ECB Member Fires September Stimulus Rocket

Traders could witness an expanded stimulus package in September if the comments of a member of the European Central Bank’s committee in charge of setting interest rates are anything to go by. Olli Rehn, who is part of the ECB’s rate setting committee and also the Governor of the Bank of Finland, hinted in an interview with the Wall Street Journal that the bank needed to come up with a “significant and impactful policy package in September”.

“…it’s often better to overshoot than undershoot, and better to have a very strong package of policy measures than to tinker,” Rehn further opined.

These comments have been interpreted to mean that the expected stimulus package to be announced by the ECB could overshoot the expectations of analysts and market watchers. The Euro immediately came under pressure on the back of these comments and has tumbled below the 1.1000 level once more. The EURUSD pair has broken the daily S1 pivot support and is now challenging the S2 pivot at 1.10926.

A break of the S2 pivot support will open the door towards the 1.1055 support area (S3 pivot). Failure to breach this support to the downside will favour a return to the 1.1115 price level and possibly the 1.1152 price level (highs of July 23 to July 30).