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The European Central Bank left the main lending rate unchanged at 0.75%. A rate cut was one of the many options that Draghi has. No change was made to the deposit rate. Some expected a cut to a negative value.

EUR/USD reacts positively to this initial move: the pair rose from 1.2260 to 1.2294 before sliding back and erasing most of the gains.

Summary:  Draghi Didn’t Deliver – Overestimated Spain and Underestimated Germany

Update:  Live blog of Draghi

This follows the cut to 0.75% last month, which was accompanied with wiping out the deposit rate.

The focus now shifts to the press conference at 12:30. We will see if Draghi delivers on his vow to “do everything to preserve the euro”.

The ECB now has 7 options left, with immediate bond buying being the most powerful one. A promise to do something would be somewhat disappointing, as Europe needs action, not promises.

Stay tuned for a live blog of the press conference.

EUR/USD climbed towards 1.23 earlier in the day, but retreated gradually before the announcement. It traded on higher ground, but with caution, since Draghi made his strong statements a week ago.

For more, see the EUR/USD forecast.