Thursday’s decision of the European Central Bank is certainly not a breakthrough. The ECB decided to leave the main interest rate unchanged at the level of 0.0%, together with Deposit Facility Rate at -0.40% and Marginal Lending Facility rate at 0.25%.
The last leaks presented by the Reuter agency gave a shadow of a chance to remove the so-called “easing bias”, although in the published statement a reference was made to the possibility of adjusting the loosening parameters depending on the economic outlook. A solid dose of surprise was assured by the words of ECB President Mario Draghi, which were definitely less dovish than could be expected. During the press conference of the President of the European Central Bank (ECB) Mario Draghi, accompanying the decision to leave monetary policy parameters unchanged at the first meeting in 2018, there were exceptionally many references to the exchange rate. In a straightforward way, Draghi referred to the Wednesday words of the US secretary of the treasury, S. Mnuchin, about the Dollar, pointing out that although the appreciation of the Euro partly results from the economic situation of the Eurozone, it is also the effect of “other comments”. He remarked that this is inconsistent with the arrangements not to affect the behavior of currencies through verbal interventions. Some representatives of the Governing Board expressed their concern about the words of Mnuchin. In M. Draghi’s opinion, the increased volatility of the Euro exchange rate is a factor threatening the revival and return of inflation to the target. The ECB is experiencing strong economic growth, as well as signs of a rise in wage pressure, which increases the conviction that the price growth will accelerate in the medium term. In the coming months, the core CPI will remain stable and then rise. Still, according to the ECB, a high degree of stimulation on the part of monetary policy is necessary. The point is to be sure that the return of inflation is permanent. “You still can not declare victory,” said M. Draghi. Purchase of assets will last until September, and if necessary, longer. There is a strong determination in the ECB for a full implementation of the QE program consistent with earlier announcements.
Let’s now take a look at the EUR/USD technical picture at the H4 time frame. A series evasive answers during the ECB press conference about the threats resulting from the situation on the currency market has been treated as an incentive to buy, which for a moment allowed to place EUR/USD on the higher rate. Nevertheless, after the Munchin comments, the market suddenly dropped towards the level of 1.2363. During the night the situation reversed and EUR/USD has managed to retrace almost 78% of the recent drop. Please notice, that according to the Elliott Wave Principle, we can still expect one more wave to the downside in order to complete the correction.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
Performed by Sebastian Seliga,
InstaForex Group © 2007-2018
Benefit from analysts’ recommendations right now
Top up trading account
Get a bonus from InstaForex
InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.
We hope you enjoyed reading the above post. How about helping us share the information to your fans and friends on social media? Meanwhile, you can rely on us daily for the latest and relevant free forex trading signals, free forex trading market news, free forex trading technical levels, weekly Pool draws, latest news from Nigeria and the world, educational articles and quality academic information, insurance news and scientific knowledge.
Do you need a classical ORGANIST or an excellent music teacher? CALL Fabian on 08033983034 or email him at firstname.lastname@example.org
Follow us on twitter @newsbeatportal
Engage #SantexTech today to build & install inverters, training on inverters & other electronic designs, projects/kits. Call 08039574535
Click to join Talk Nigeria Today, a group where hot, controversial, and breathtaking issues are brainstormed upon.