Currencies & Forex

Three Key Points From ECB September Policy Meeting and EUR/USD Bearish Reaction

Euro-symbol-graphicSometimes the best thing to do is nothing at all and this is exactly what the ECB’s President Draghi decided. Here are three key highlights from the ECB policy meeting.

 

  • Bond Buying: Europe’s Central Bank will continue purchasing bonds at a rate of €80 billion ($90 USD) per month until the end of March and may extend its policy beyond this should the EU fall short of its inflation targets in 2017.
  • Economic Outlook: In a post-Brexit world, economic growth expectations are only slightly lower @ 1.6% vs. 1.7% for 2017 and inflation is estimated to be @ 1.2% vs. previous views @ 1.3%. Neither revision is low enough to give cause for further stimulus measures at this point.
  • Helicopter Money: Contrary to what some may have wished, the central bank has no intentions upon more aggressive QE measures such as buying equity securities in the open markets as is being done by Japan and Switzerland’s central banks.

On its part, the EUR/USD (Euro vs US Dollar forex pair) faded the news and is retreating as reflected by the daily and 2-hour time frame chart analysis. The implications are that it could see further downside risk as a short-term correction is most probable.

 

EUR/USD forex pair
Click to enlarge

 

 

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