The European Central Bank says "we stand ready to take appropriate and targeted measures, as necessary and commensurate with the underlying risks."
Statement by the President of the ECB
The coronavirus outbreak is a fast developing situation, which creates risks for the economic outlook and the functioning of financial markets. The ECB is closely monitoring developments and their implications for the economy, medium-term inflation and the transmission of our monetary policy. We stand ready to take appropriate and targeted measures, as necessary and commensurate with the underlying risks.
All ears are on comments from central bankers in the lead into the various interest rate meetings coming up this month, (RBA today) and the G7 finance ministers and central bankers who are holding a teleconference to discuss their policy response to the economic fallout from the coronavirus tomorrow. The G7 call is going to be led by Mnuchin and the Fed chair and there’s going to be a communiqué afterwards.
FX implications
It's hard to say how such sentiment will impact the euro, considering its funding currency status, the exodus from EM-FX and how hard the dollar could be hit should the Federal Reserve are forced into cutting interest rates, stripping the dollar of some of its interest-rate advantage. However, on a volume profile analysis, the euro's point of control for the prior week's trade is located at 1.0996 as a downside target from which could act as a support, falling in as a 50% mean reversion level of the rally from 1.0805.
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