Euro is heading lower today, dropping on the latest comments from ECB policymakers. The lower rate was expected by many, but what wasn’t expected was an acceptance of possibly negative rates.
Today, the European Central Bank announced its latest rate decision. The ECB decided to cut its rate from 0.75 per cent to 0.50 per cent. This was expected, and the move did little to affect the euro in trading. ECB president Mario Draghi changed all that with his comments.
In his comments, Draghi indicated that the ECB is willing to consider negative deposit rates as a possible solution to the problems caused by the current crisis and in an effort to boost the eurozone economy, which is faltering.
The comments surprised many Forex traders, and shook confidence in the 17-nation currency. As a result, the euro fell against most of its major counterparts, dropping as concerns about the eurozone prevail. Indeed, the euro is dropping by quite a bit today as a result of the worries about what’s next, as Cyprus continues to languish and Slovenia shows signs that it might be next.
At 14:32 GMT EUR/USD is down to 1.3068 from the open at 1.3178. EUR/GBP is down to 0.8421 from the open at 0.8472. EUR/JPY is down to 127.9740 from the open at 128.3550.
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