After ECB: More positive outlook for the EUR – TDS

By FXStreet FXStreet (Córdoba) – Research Team at TDS, considers that today’s ECB actions (rate cut in the deposit rate and an extension in the purchase program) could give support to the euro.

Key Quotes:

“The ECB today significantly disappointed market expectations, delivering the bare minimum of measures.”

“Draghi continued to use language that they are ready to use “all the instruments available” which means rate cuts in addition to other changes are possible, but he went to great lengths not to reinforce more to come on the rate front.”

“Moreover, the revisions to macro forecasts which saw GDP forecasts marginally flat to higher and CPI marginally lower, don’t suggest any particular pressing urgency to do more.”

“While we hesitate to rush to conclusions, this backdrop leaves us with a more positive outlook toward the EUR overall. At a minimum, we expect the common currency to benefit from short covering in the days ahead, particularly on certain cross rates.”

“For the USD, today’s action puts the onus much more clearly on the Fed for returning EURUSD to its downward path. For now, we see notable upside risk to our year-end 2015 forecast of 1.03, but we leave our Q1-16 outlook (also at 1.03) unchanged for …read more

Source:: FX Street