The euro crashed after European Central Bank President Mario Draghi suggested that interest rates will remain low for a long period of time. The currency advanced versus the Great Britain pound, which was also hurt by comments of the nation’s central bank.
The ECB left its benchmark interest rate at 0.5 percent. It was not a surprise for the Forex market. Yet Draghi managed to shock market participants, saying:
The Governing Council expects the key ECB interest rates to remain at present or lower levels for an extended period of time
The euro sank versus most its major counterparts after the comments. Yet the sterling fell even more as the Bank of England also signaled that borrowing costs should remain low in the near future. Mark Carney was not shy during his first meeting as the BoE Governor and released a statement, which was more detailed than usual and said that rise of interest rates may hurt the outlook for economic growth:
The significant upward movement in market interest rates would, however, weigh on that outlook; in the Committeeâs view, the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy.
EUR/USD dropped from 1.3008 to 1.2919 as of 16:12 GMT today and its daily low was at 1.2882 and was lowest since May 29. EUR/JPY tumbled from 129.89 to 129.23. At the same time, EUR/GBP soared from 0.8511 to 0.8570, though it has retreated from the daily maximum of 0.8630.
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