The euro today crashed against the US dollar after the European Central Bank announced that it would cut its quantitative easing program by half to â¬30 billion in 2018. The ECB also left interest rates at their current levels with Mario Draghi, the ECB President, expressing concern over a number of financial issues facing the Eurozone including low inflation rates.
The EUR/USD currency pair went into a downward spiral after the ECB announcement losing over 150 points from its daily highs.
The ECB interest rate and QE announcement was the main driver behind the EUR/USD currency pair’s massive decline today. The ECB maintained interest rates at 0.00%, while the marginal lending facility was maintained at 0.25%, and the deposit facility rate remained at -0.40%. The uncertainties regarding Catalonia’s independence also affected the euro negatively as Catalan President, Carles Puigdemont failed to call for regional elections against market expectations.
Further, news from the USA indicating that Janet Yellen may not be in the running for the renewal of her term as Federal Reserve Chairperson, also contributed to the currency pair’s decline. The release of better-than-expected initial jobless claims data by the Department of Labor also boosted the greenback against the euro.
The currency pair’s future performance is likely to be affected by political events in the Eurozone as well as tomorrow’s release of the US GDP data.
The EUR/USD currency pair was trading at 1.1685 as at 16:35 GMT having crashed from a daily high of 1.1836 earlier today. The EUR/JPY currency pair was trading at 132.90 having dropped from a high of 134.49 before the ECB announcement.
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