ECB Cuts Rates, Announces New QE Program, EURUSD Slumps Below 1.10

• ECB cuts rates by 10bps, in-line with market expectations, announces new QE program.
• EURUSD jumps then slumps below 1.1000 post-release.

Q3 2019 EUR Forecast and Top Trading Opportunities

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ECB Loosens Monetary Policy Further, Leaves New QE Program Open-Ended

The European Central Bank cut it main interest rate, the deposit facility, by ten basis points to -0.50% and announced that it would re-start its bond buying program at the start of November. The central bank will buy EUR20 billion of bonds per month “for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates”. The market had been expecting an end date on the QE program so today’s open-ended announcement helped push the single currency sharply lower.

The central bank also announced new TLTRO terms and said, “a two-tier system for reserve remuneration will be introduced, in which part of banks’ holdings of excess liquidity will be exempt from the negative deposit facility rate”.

ECB Monetary Policy Decision – September 12, 2019.

EURUSD Five Minute Price Chart (September 12, 2019)

All eyes now on ECB President Mario Draghi’s press conference at 12.30 GMT.

IG Client Sentiment data show that of retail traders are 57.9% net-long of EURUSD, a bearish contrarian indicator. However, recent daily and weekly positional changes suggest GBPUSD may soon move higher despite traders remaining net-long.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on the latest ECB move? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.com or via Twitter @nickcawley1.