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ECB Leaves Rates Unchanged, EUR/USD Remains Weak and Tests 1.1700

ECB Leaves Rates Unchanged, EUR/USD Remains Weak and Tests 1.1700

Nick Cawley, Senior Strategist

ECB and EUR/USD Price, News and Analysis:

  • ECB leaves all policy measures unchanged.
  • EUR/USD remains weak and testing 1.1700
  • IG trader sentiment suggests lower prices.
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The European Central Bank left all monetary policy settings untouched at today’s meeting. The main refinancing rate remains unchanged at 0.00%, the deposit facility was untouched at -0.5% and the marginal lending rate stays at 0.25%. The PEPP envelope of EUR 1,350 billion was also left untouched and the APP remains at EUR 20 billion a month.

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ECB President Christine Lagarde will add further commentary to today’s decision at the 13:30 GMT press conference. Traders should remain vigilant for talk over any future plans to increase either the PEPP or PSPP programs, the central bank’s thoughts about the worryingly low level of inflation, the current level of the euro, and risks to the economic outlook.

Friday’s economic calendar also contains some high importance releases including the Euro Area inflation estimate for October and the first look at Q3 GDP for the single block. For all market-moving economic data and events, please see the DailyFX Calendar.

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EUR/USD has been weak all morning pre-ECB, with the US dollar picking up a small bid, and made an attempt to break below 1.1700. This first attempt was quickly rejected but a dovish press conference from President Lagarde and a marginally better-than-expected US flash Q3 annualized release – 33.1% vs. 31% forecast – may see this level tested again in the short-term.

EUR/USD 5-Minute Price Chart (February – October 29, 2020)

EUR/USD Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 2% 4% 3%
Weekly -17% 8% -4%
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IG Retail trader datashows 39.09% of traders are net-long. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise. Howeverrecent changes in sentiment warn that the current EUR/USD price trend may soon reverse lower despite the fact traders remain net-short.

What is your view on EUR/USD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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