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EUR/USD Spikes on Surprise ECB Meeting to Address Bond Market Rout

EUR/USD Spikes on Surprise ECB Meeting to Address Bond Market Rout

Justin McQueen, Strategist

EUR/USD Price Analysis & News

  • ECB Announces ad-hoc Meeting to Address Bond Market Turbulence
  • Less Talk More Action Needed to Underpin the Euro

ECB Announces ad-hoc Meeting to Address Bond Market Turbulence

In light of the surge in global bond yields and the significantly wider core/peripheral spreads. The ECB have announced that they will hold an ad-hoc Governing Council meeting in order to discuss the current market conditions. This will include the somewhat disorderly price action across the global bond market. The meeting will take place at 10:00BST, however, it is not known whether a statement would be released. In reaction to the initial headline, Euro rallied to just under 1.05, while Bund-BTP spreads tightened aggressively.

EUR/USD Chart: Intra-day time frame

EUR/USD Spikes on Surprise ECB Meeting to Address Bond Market Rout

Source: Refinitiv

Less Talk More Action Needed to Underpin the Euro

That said, at the time of writing, reports suggest that the ECB will discuss reinvestment of PEPP bonds and potentially tilt PEPP bond reinvestment to aid weaker countries. This looks to be a slight disappointment with the Euro pulling back from daily highs as the statement is a reiteration of current forward guidance. In turn, should the ECB merely state they are closely watching markets as opposed to announcing any new tools, this could prompt a retracement of the initial moves with EUR/USD once again back down to the 1.04 handle.

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

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