EURUSD Nosedives as Draghi Calls Reconsideration in March

* There was a major release lined up today in the Euro Zone, which may impact the EURUSD pair moving ahead.

* ECB Interest Rate Decision was announced by the European Central Bank.

* The central bank made no changes in their monetary policies and the rates were unchanged.

* There was no change in the interest rate, and was kept at 0.05%.

* ECB’s Deposit Facility Rate was also unchanged at -0.30%.

ECB Interest Rate Decision

As mentioned, the Euro Zone saw a major release today, as the ECB Interest Rate Decision was announced by the European Central Bank. The forecast was lined up for no change in the interest rates at 0.05%, and the Deposit Facility Rate was forecasted to remain at -0.30%. The outcome was as expected, as there was no change in the rates, and the central bank made no alteration in their monetary policies.

The report stated that “today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.05%, 0.30% and -0.30% respectively”.

It is important to note that when the central bank met on Dec 3, they cut the deposit rate by 10 basis points. So, it was very likely that there would be no changes this time around.

Coming on the main event after the release, i.e. ECB’s President Draghi is always closely watched for the upcoming actions. He stated in the press conference that “We expect rates to remain at present or lower levels for an extended period of time” and “Asset purchases are proceeding smoothly and continue to have a favorable impact on the cost and availability of credit”. Moreover, he added “Downside risks have increased amid heightened uncertainty about EM growth, volatility, and geopolitical risk”.

Overall, there was nothing new for the Euro, but once he said that “necessary to review and possibly reconsider our monetary policy stance at our next meeting in early March”, then there was a sharp

downside reaction. As of writing, the EURUSD pair traded lower towards 1.0820 area, and looks set for more losses if the mentioned area does not hold.

Technical Analysis – EURUSD

The EURUSD pair was down and out during the press conference. If the 1.0800 support area fails to hold, then we can witness a slide towards the 1.0750 levels. On the upside, the 1.0850 may be seen as a resistance area.