ECB meeting outcome: bearish for EUR
As it was widely expected, the European Central Bank left the key interest rate unchanged at 0.05% on its meeting on Thursday. Deposit rate stays in the negative zone at -0.2%.
However, the press conference later in the day became a strong bearish driver for the euro. According to the bank's governor Mario Draghi, QE program could be extended in December, after the newly revised economic projections are published. Mr. Draghi pointed to the increased external risks that could hurt euro zone's growth and inflation in the nearest future. He noted that the ECB discussed the possibility of a deposit rate hike in October - for the first time in many months.
EUR/USD plummeted after Draghi's dovish comments, breaking below the trend support line at 1.1250. The pair is now testing the 1.1160 support to the downside. Selling the pair on rallies still remains the best strategy.