Euro Falls Against US Dollar on Dovish ECB Rate Decision, Later Recovers

The euro today fell to new 2-day lows against the US dollar following the dovish interest rate decision by the European Central Bank and the Governor’s comments. The EUR/USD currency pairs decline was further accelerated by the mixed US inflation data released shortly after the ECB decision to cement the pair’s losses.
The EUR/USD currency pair today fell from an intraday high of 1.1287 to a low of 1.1228 before retracing some of its losses at the time of writing.
The currency pair today rallied higher in the Asian session in a recovery move sustained by the weak greenback as tracked by the US Dollar Index. The currency pair headed lower after the ECB announced its monetary policy decisions where it left its rate decision at 0.00% as was expected and maintained its deposit facility rate at -0.40%. The currency pair headed lower following dovish comments by ECB President Mario Draghi where he stated that the current fiscal policies geared towards expansion are sustaining the economy. He also stated that it was too early to initiate the tiered deposit rate program as the ECB Governing Council was yet to fully discus this option.
The release of the mixed US consumer price index data by the Bureau of Labor Statistics further contributed to the pair’s decline as the headline print beat expectations.
The currency pair’s short-term performance is likely to be affected by the release of the FOMC minutes at 18:00 GMT.
The EUR/USD currency pair was trading at 1.1266 as at 15:56 GMT having recovered from a low of 1.1228. The EUR/JPY currency pair was trading at 124.97 having fallen from a high of 125.45.

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