Euro Rallies Ahead of ECB Rate Decision, Drops on Dovish Draghi Speech

The  euro today rallied before the  European Central Bank rate announcement, but dropped lower after the  dovish comments made by  the  ECB President following the  announcement. The  pair headed lower in  the  American session despite the  release of  disappointing American macro data.
The  EUR/USD currency pair today dropped from a  high of  1.1393 to  a  low of  1.1330 following the  dovish Draghi comments.
The  currency pair was in  a  consolidative during the  Asian session, but broke out of  it in  the  early European session with most analysts attributing the  spike to  the  weak US dollar. Another reason behind the  spike could be the  release of  the  German consumer price index data for  November by  the  Federal Statistical Office. The  CPI print came in  at  0.1% translating into an  annualized 2.3% and  both prints met expectations. The  pair stayed within this range as  markets awaited the  ECB monetary policy decision scheduled for  12:45 GMT. The  ECB kept its base rate at  0.00%, while the  marginal lending facility was maintained at  0.25%; the  deposit facility rate was kept at  -0.40%.
The  dovish comments by  ECB President Mario Draghi after the  announcement where he stated that recent inflation data was weak and  that the  eurozone faced numerous downside risks drove the  pair lower. The  ECB also said that it would terminate its quantitative easing program at  the  end of  this month.
The  pair’s short-term performance is likely to  be affected by  tomorrow’s eurozone PMI releases and  US retail sales data.
The  EUR/USD currency pair was trading at  1.1355 as  at  17:32 GMT having recovered from a  low of  1.1330. The  EUR/JPY currency pair was trading at  129.04 having rallied from a  low of  128.69.

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