No Fireworks for Mario Draghi's Final ECB Meeting
Joe Perry October 24, 2019 3:19 PM
The ECB left rates unchanged, while Draghi defended the decision to keep policy accommodative
As my colleague Fawad discussed earlier in the ECB Preview, today was Mario Draghi’s final meeting as ECB President before Christine Lagarde, who attended the meeting, takes over on November 1st. At the September meeting, the ECB lowered the Euro Area Deposit Rate from -0.4 to -0.5, sending rates further into negative territory. In addition, they restarted their bond buying program. Todays meeting was not expected to produce any highlights as many on the member countries were split about last month’s moves.
Today’s meeting was as expected. The ECB left rates unchanged, while Draghi defended the decision to keep policy accommodative given the view of protracted weakness and downside risks, especially in light of low inflation. He said negative rates have been effective. Draghi also once again called on governments to play their part in a recovery, asking them help promote growth with sound and responsible fiscal policy. Before Draghi departure, he said he was proud that he and his colleagues always pursued the mandate of pursing inflation of just below 2%.
EUR/USD was unchanged immediately after the rate announcement, however had gone bid from 1.1133 to 1.1153 during the press conference as Draghi was declaring how negative rates had helped. Also, Draghi noted that there was a low likelihood of a no-deal Brexit. (Price has since treated on better US PMI data).
On a daily EUR/USD chart, it appears prices have room to move lower towards 1.1000 as the RSI unwinds and consolidates near the resistance at the 50% retracement level from the June 24th high to the October 1st low, near 1.1150. This level is also just below the 200-day moving average and a long term downward sloping trendline. Horizontal support comes in below 1.1062, an then the important 1.1000 level.
Source: Tradingview, FOREX.com
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.