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The ECB did a lot: cut the main lending rate to the round 0% (big surprise), the deposit rate to -0.40% (as expected), added 20 billion to monthly buys (at the high end of expectations) and added corporate bonds to the list. However, during the press conference he says no further cuts are needed and EUR/USD rebounds quite brutally.  

This is a lot and EUR/USD crashes over 100 pips in the immediate aftermath.  


It was a tale of two moves: a crash on the decisions and a rally on the press conference. As it happened:


  • Main lending rate surprisingly cut to 0%
  • Deposit rate cut to -0.40%, as expected
  • QE enlarged to 80 billion euros, more than expected.
  • ECB will buy corporate bonds – non-financial investment grade
  • ECB to buy up to 50% of issue from 33% beforehand.
  • QE will run to March 2017 but perhaps more – no change.
  • 4 new TLTROs announced

This was clearly more than expected on all fronts.

EUR/USD reacted with a fall all the way to the double bottom of 1.0820 which is now a triple bottom.

Press conference

  • Lower forecasts for inflation and growth
  • No currency wars
  • No need for further cuts

A big change happened: EUR/USD began rising, moving all the way to 1.1114 and close the press conference around 1.1040.

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