The EUR/USD currency pair today plummeted to new lows following comments made by Mario Draghi regarding weak inflation in the euro area. The currency pair retraced all the gains it had made after the European Central Bank left its monetary policy intact at today’s meeting.
The EUR/USD currency pair lost over 100 points as it plummeted from a high of 1.2446 to hit a low of 1.2340 at the time of writing.
The currency pair had spiked to new highs after the ECB’s Governing Council left its base lending rate at 0.00%, its marginal lending facility at 0.25% and its deposit facility rate at -0.40%, which was expected. The pair rallied higher after Mario Draghi’s initial comments at his post-meeting press conference as he explained the context behind the change in language regarding the ECB’s quantitative easing program. The currency pair’s massive drop off was caused by Draghi’s comments regarding foreign exchange risk and the low inflation figures. Traders rushed to exit their long positions in the euro following the dovish comments.
Higher demand for the US dollar also contributed to the currency pair’s decline. The release of the higher-than-expected initial jobless claims data by the Department of Labor could not stop the greenback’s march against the single currency.
The currency pair’s future performance is likely to be affected by the release of German trade balance data and the US change in non-farm payrolls for February, both scheduled for tomorrow.
The EUR/USD currency pair was trading at 1.2327 as at 16:05 GMT having crashed from a high of 1.2446. the EUR/JPY currency pair was trading at 130.84 having declined from a high of 131.97 earlier today.
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