Euro rebounds from losses against the other major currencies after Mario Draghi, European Central Bank President, announced to the public that the ECB will end the possibility of more rate cuts to occur. This signal coming from the ECB President himself is a decision made after delivering a stronger-than-expected package of stimulus measures in the European market.
Data shows that the euro was up 0.66 percent against the US dollar at 1.1069 after falling low at 1.0823 on an earlier data. According to investing.com reports, “the euro initially weakened sharply after the ECB cut interest rates across the euro zone to new records lows and boosted its quantitative easing program”.
Draghi further said that the ECB did not anticipate that it will be necessary to reduce interest rates a little further but is expressing that this decision could possibly change. This is a result to the pressure mounted on the ECB to create fresh steps to bring up the euro area economy after the inflation created negative data last month falling 0.2 percent. This time, the ECB targets inflation close to but just under 2 percent.
Euro also bounced back from losses against the yen and pound showing EUR/JPY data surging 0.9 percent to 125.78 – up from its previous lows of 123.66. EUR/GBP advanced 0.37 percent to 0.7781 after falling lows of 0.7652 earlier according to investing.com.
Those data mentioned above is a product of ECB’s mindful program of boosting its quantitative easing program by €20 billion per month to €80 billion starting April this year. ECB also said that the investment grade euro-dominated bonds would become legible for purchases under the its asset purchase program.
The European market had initially approved the ECB’s decision to cut its rates to fresh records low as they set start of buying corporate debts for the first time and effectively begin paying banks to borrow from it to lend to companies and household according to a Reuters report.