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TD Securities analysts think that despite the European Central Bank’s dovish message, a new catalyst would be needed for the EUR/USD pair to brake below 1.1600.

Key quotes

“Today’s ECB decision started out with an unusual preamble in the press release, noting that risks are “clearly tilted to the downside” and essentially pledging to deliver more stimulus in December.”

“Lagarde’s opening statement was equally dovish, and we see two key messages from the press conference: One, the Governing Council was in full agreement that risks are tilted “clearly to the downside” and that the ECB needs to recalibrate its tools in December. Two, that everything is on the table for December, and it’s going to be treated more like the March/April decisions than the PEPP top-up of June.”

“EURUSD is weaker after the ECB’s dovish turn this month, but follow-through selling pressure has been fairly muted — so far. From here, we think investor attention will migrate quickly to month-end considerations and next week’s US election. We see some further downside risks for spot near-term as the market still looks short USDs overall. That said, we think fresh catalysts would be needed to see a clear push to a new trading range below 1.16 in advance of the vote.”