ECB Quick Analysis: Not rocking the boat, but it's already sinking, EUR/USD could extend the slide

The European Central Bank left its interest rates unchanged, including the deposit rate, which will not be "tiered" anytime soon, according to President Mario Draghi. They also left the forward guidance unchanged, thus signaling no rate hikes this year.

Another "no-change" came from the assessment of risks. It remains tilted to the downside according to the Frankfurt-based institution. Concerns about geopolitics, emerging markets, and protectionism all weigh. On the other hand, the labor market remains promising. 

And this statement about downside risks weighed on the euro, even though it was only a repetition of the previous statement. 

Why? First, algorithms respond to these headlines with sell orders. Also, the lack of improvement and a rebalancing of risks does not help. 

It did not go too far, not only as there was little new in his words, but also due to US data. Inflation is sliding also in the US, with Core CPI disappointing with 2.0% against 2.1% expected. 

However, Draghi later said the R-word: recession. He stated that the risks are low given the ECB's studies. However, the mere mention of the word already triggered more selling, algorithmic or by traders, that do not like the mention of the word.

EUR/USD has more room to the downside

The world's most-popular currency pair could extend its falls. The upcoming TLTROs and taking forecasts into the equation could push the common currency lower. But that comes just in June.

And for the shorter term, the ECB showed its dovishness, not so surprising but it serves a reminder. The FOMC Meeting Minutes are due later on, and they provide details from the dovish tilt that the Fed took. However, the economic situation and the interest rates are entirely different on the other side of the pond. All in all, the risks are tilted tot he downside not only for the euro-zone economies but also for EUR/USD.