ECB: 30% more QE and lower rates

EURUSD,

ECB’s Draghi finally delivers his bazooka. The ECB went all out today with rate cuts, more QE and further long term refis. The deposit rate was cut by 10 bp to -0.40%, from -0.30% previously. This was the minimum markets had been looking for but Draghi certainly overdelivered in other areas. The main refinancing rate was cut to 0.00% from 0.05% previously and the top rate cut to 0.25%. The ECB also lifted monthly QE purchases to EUR 80 bln, and expanded the list of eligible assets. Furthermore, the ECB said it will hold more long term refinancing operations. So an attack on all fronts and the DAX jumped in an initial reaction. Bund futures jumped higher, but have fallen back again since.

The Press Conference takes place at 1:30 GMT and lasts approximately an hour and begins with Mr Draghi reading the prepared statement and then the floor is open to the financial press. It is often during the question and answer session where the most volatility takes place. This is because often the words he chooses to use (or in deed not use) can be interpreted very differently. At the time of writing EURUSD is trading at lower Daily Bollinger Bands and at the levels that caused the pair to turn higher in the beginning of February. The nearest significant resistance levels are at 1.0994 and 1.1070 while the nearest support is at 1.0810 with 1.0778 and 1.0709 not that far below it.