– Euro tumbles following disappointing European Central Bank commentary
– Short-term forecasts now favor further Euro weakness
– Follow real-time news update via the Forex Real Time News page
The Euro fell sharply as European Central Bank President Mario Draghi announced lower growth and inflation forecasts. The sharp sell-off warns further losses are likely.
Traders kept a close eye on planned commentary from the ECB’s Draghi as he issued prepared statements from the central bank’s policy meeting, and the decidedly dovish tone in his commentary sent the Euro sharply lower across the board.
Indeed the EUR/USD exchange rate quickly hit its lowest levels in several weeks as official forecasts for both Gross Domestic Product growth and Consumer Price Index inflation saw notable downgrades.
Euro Tumbles following European Central Bank Commentary
Source: DailyFX Powered by TradingView, Prepared by David Rodriguez
Draghi went on to say that the ECB will use “all tools within mandate if needed” as growth risks remain to the downside. And further commentary on the importance of the Euro exchange rate, contagion risks from recent Emerging Market-led financial volatility, and downward pressure on prices underlined that the bank remains on relatively high alert.
It is safe to say that further European Central Bank policy easing is not imminent, but Draghi likewise made it clear that officials stand ready to react if growth and inflation trends do indeed take a sharp turn for the worse.
Our volume-based studies suggest that a Euro break below $1.12 leaves it vulnerable to a return towards $1.10, and risks remain to the downside following this ECB disappointment.
Written by David Rodriguez, Senior Strategist
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.Learn forex trading with a free practice account and trading charts from FXCM.
Source: Daily fx