ECB’s ability to weaken the euro continues to diminish – MUFG

By FXStreet Lee Hardman, Currency Analyst at MUFG, notes that the euro has remained stronger in the Asian trading session after strengthening sharply following the ECB’s announcement of a comprehensive package of easing measures.

Key Quotes

“It was the second consecutive time that the euro has strengthened following the announcement of further ECB easing following on from the sharp rally back in December. What is more surprising on this occasion is that it is harder to describe the comprehensive package of easing measures as disappointing which has provided a bullish signal for the euro by highlighting that is becoming increasingly difficult to weaken it further. The euro is already significantly undervalued and has been consolidating at lower levels for just over a year now.

The main trigger yesterday for the sharp strengthening of the euro was the statement from President Draghi that he doesn’t anticipate it will be necessary to cut rates further from today’s perspective which prompted the market to scale back expectations that rates are likely to be lowered deeper into negative territory. Expectations for even lower rates were dampened further by comments from President Draghi that the Governing Council discussed the option of introducing a tiered deposit system but decided against it …read more

Source:: FX Street