- EUR/USD accelerates the decline below 1.10.
- ECB cut the deposit rate by 10 bps to -0.50%.
- Downside risks in the euro area persist.
The selling pressure around the single currency is now picking up extra pace and drags EUR/USD to the 1.0940/35 band, near YTD lows.
EUR/USD much weaker after the ECB finally delivers
The pair debilitates further after President Draghi reiterated that downside risks to the euro zone outlook persist, adding that global uncertainty is particularly hurting the manufacturing sector.
The ECB now sees the economy in the region expanding 1.1% this year (from 1.2%), 1.2% in 2020 (from 1.4%) and 1.4% in 2021 (unchanged). Regarding inflation, the bank’s Staff expects consumer prices to rise 1.2% in 2019 (from 1.3%), 1.0% in 2020 (from 1.4%) and 1.5% in 2021 (from 1.6%).
President Draghi also reiterated that interest rates are expected to remain at present or lower levels until inflation picks up pace on a convincing fashion and converges to the bank’s goal.
EUR/USD levels to watch
At the moment, the pair is losing 0.67% at 1.0936 and a breach of 1.0925 (2019 low Sep.3) would target 1.0839 (monthly low May 11 2017) en route to . On the upside, the next hurdle emerges at 1.1053 (21-day SMA) seconded by 1.1084 (high Sep.5) and finally 1.1146 (55-day SMA).
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