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Forex Strategy Video: The ECB Sends EURUSD Tumbling on Effective Verbal Intervention

By , Chief Currency Strategist
13 March 2014 21:26 GMT

Talking Points:

• ECB President Draghi made a connection between the Euro's level and inflation that sent EURUSD plunging

• RBNZ, RBA and BoJ efforts to talk their currencies down have been met with more varied success

• Expectations of action, specifics and repetition are all important to successful verbal intervention

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EURUSD tumbled this past session from multi-year highs, but the catalyst wasn't a trendline or data release. ECB President Draghi was the instigator to the sharp turn. 'Verbal intervention' from central banks is fairly common in the FX market - especially as of late - but its efficacy can vary dramatically. The RBA turned AUDUSD from 0.9000 temporarily; the RBNZ failed to drive its currency back after it hiked; and the BoJ has a long-standing issue with successes and failures talking their currency down. What makes this a successful endeavor. How should we account for it in our trading. We discuss this in today's Strategy Video.

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13 March 2014 21:26 GMT