There is not trade call for the session. During yesterday’s New York session, the ECB exceeded expectations by cutting the Deposit Rate by 10 basis points, from -0.3% to -0.4% and also cutting the Main Refinancing Rate from 0.05% to 0.00%, and the Marginal Lending Facility from 0.30% to 0.25%.


Current Sentiment
They also announced a new series of 4 TLTRO’s, and an increase of €20bn to its asset purchase programme, now at €80bn per month. As a result EUR weakened substantially with EURUSD falling 120 in the following 15 minutes. The euro however reversed when during the Press Conference, Draghi stated “does not anticipate the need to cut rates further but new facts could change the situation”, and that the ECB “decided against a tiering system in order not to signal rates could go as low as ECB wanted.” Draghi did however later state that further easing could be done via other tools, such as an expansion of QE. EURUSD proceeded to rally 400 pips from lows as the market drastically overreacted to the idea that the ECB’s rate cutting cycle is on hold for the time being. The rapid squeeze higher is partly attributable to short-covering, as we have witnessed a great deal of euro selling during the past 2 years. Nevertheless, by increasing the euro money supply by €80bn per month, the euro should move lower in the medium-term, based on the economic law of supply and demand. In addition, the risk of a hawkish Fed next week may see a resumption of dollar buying, given the rise in core inflation in the US.  
There was no notable news during the Asian session.

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