The ECB had cut rates 10 bps, as the market was expecting.  However, as we noted in our ECB Recap,  the ECB also announced that they would introduce OPEN- ENDED QE at a rate of EUR 20bln/month.  The ECB sent a message to the market that there is no targeted end date to QE.  

The market took the news as dovish, as EUR/USD dropped 100 pips to previous lows from September 3rd, while DXY rose 50 pips, near towards resistance from the same date.

EURUSD

Souce: Tradingview, FOREX.com

 

Dollar Index

Source: Tradingvew, Forex.com

However a half hour later, US President Trump came out a message of his own:

“European Central Bank, acting quickly, Cuts Rates 10 Basis Points. They are trying, and succeeding, in depreciating the Euro against the VERY strong Dollar, hurting U.S. exports.... And the Fed sits, and sits, and sits. They get paid to borrow money, while we are paying interest!” 

As you can see from the charts above, EUR/USD and DXY quickly reversed course and surpassed levels from before the ECB announcement! Why?  Because now all eyes are on the FOMC meeting next week on September 18.  The market is currently pricing in a 100% chance of a rate cut next week, a majority of which is expecting a 25bps cut.   

Powell insists the Fed is an independent government body (as it should be).  But one needs to consider…will the FOMC feel the pressure from President Trump to cut more than it really wants to (even after he called Powell a “bonehead’ yesterday)? 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD extends its decline amid upbeat US consumer confidence

EUR/USD is extending its falls toward 1.1050 after US Consumer Sentiment beat expectations with 92 points. Earlier, retail sales met expectations. 

EUR/USD News

GBP/USD rises above 1.24 as Brexit uncertainty prevails

GBP/USD hits a 6-week high above 1.24. The DUP dismissed reports that it would accept special treatment for the province as a solution to the backstop. The EU is ready to grant a Brexit extension as Johnson faces growing criticism.

GBP/USD News

USD/JPY: holding in higher ground ahead of US Retail Sales

Risk appetite dominates the financial world, weighing on safe-haven assets. US Retail Sales and the preliminary Michigan Consumer Sentiment Index up next. USD/JPY bullish case prevails, 107.45 critical Fibonacci support.

USD/JPY News

The good, the bad and the extremely ugly crypto

XRP is in a borderline situation and with little room for doubt. Bitcoin demonstrates its power and positions itself as the emerging leader. Ethereum is in an intermediate situation, far from risk but also from opportunity.

Read more

Gold remains on track to end week below $1,500

The troy ounce of the precious metal rose above $1,500 but failed to preserve its strength as the upbeat market sentiment made it difficult for the safe-haven gold to find demand. 

Gold News

Forex Majors

Cryptocurrencies

Signatures