The European Central Bank decided to leave the Minimum Bid Rate unchanged at 1.50%. Contrary to previous decisions, the outcome of this one was uncertain. Given the chances of a rate cut, this move should have been positive for the euro, at least until Trichet opens his mouth.
But given the uncertainty towards the rate decision and the big increase in the British QE policy, EUR/USD doesn’t rise but rather slides. It was trading around 1.33 before the release. It continues to trade choppily and finds itself on lower ground, under the 1.3285 but still above the support line of 1.3225.
Towards the release, expectations dropped from a big 0.50% cut to no cut at all and only more liquidity measures. We’ll know about all the measures at the press conference, Trichet’s last, at 12:30 GMT.
Earlier, the Bank of England decided to expand the quantitative easing program by an additional 75 billion pounds. There was uncertainty about the actual move, and a big surprise about the big size. GBP/USD crashed to a 15 month low before bouncing back, but EUR/USD was hurt as well.
Euro/dollar moving up slowly in a channel, but the British decision sent it down to support above 1.3285, before bouncing back towards the rate decision.
EUR/USD lines: 1.35, 1.3430, 1.3360, 1.3285, 1.3225 and 1.3145. For more about the euro, see the EUR/USD forecast.
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