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Draghi: no discussion of tapering – EUR/USD falls

The European Central Bank was expected to leave its policy unchanged. The interest rate is predicted to remain at 0%, the  deposit rate at -0.40% and the QE program at €80 billion / month. And indeed, we did not receive any policy change.  Perhaps the action will come in the press conference.

In the press conference, Mario Draghi does not provide any big news. He tells us that in December, they will have new forecasts, extending to 2019 and then perhaps we will get news about the next steps.

Draghi clarifies that tapering of QE was not discussed: EUR/USD slides back after a blip to the upside. Draghi also says that low rates work and  mentions various liquidity  achievements.

The bottom line is that we will get more news in December, but  beginning to end the QE program in March seems unlikely.

Draghi adds that he does not see any scarcity in bond buying. This implies that they can easily extend the QE program beyond March 2017.

EUR/USD looks heavy above 1.0950.  

This reaction goes hand in hand with our preview:  ECB Preview: no news is good news for Draghi, bad news for the euro [Video]

Here is the chart:


In terms of his assessment of the current  situation, there is no news. An accommodative policy is necessary, despite some moderate improvements.

The current program ends in  March 2017. The speculation is about the future about this bond-buying scheme. If the ECB takes the tapering path, the euro could rise. This scenario looks unlikely at the moment. There are higher chances that the ECB extends the current program beyond the current end date.

EUR/USD is stuck under 1.10, with resistance at 1.1120 and support at 1.0910.

Here is  the live coverage with Valeria Bednarik, Mauricio Carrillo and myself:

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.