EUR/USD almost flat after ECB gets a new Vice President nomination on “consensus”

  • The market is concerned about ECB´s  independence.
  • Broad recovery in the dollar is hurting EUR.

EUR/USD closed the European session around 1.2407, almost unchanged (+0.02%) after the ECB got a new Vice President on consensus nomination in the form of De Guindos, the current Spanish economy/finance minister.

As par De Guindos- “Steps need to be taken to deepen economic and monetary union and having been a government minister does not limit the independence of the ECB. Independence of ECB guaranteed by its mandate. He is neither a hawk nor a dove, but a pragmatic person”.

The market is assuming that De Guindos appointment has cleared the way for a German ECB´s president next year, when Draghi’s term will end and in that scenario, Weidmann, the current BUBA chief, may be the next president, who is known as a hawk, but now increasingly positioning himself as an owl (centrist) for the vital post.

For the EUR, there were no important economic data on Monday, but  the current account for December flashed subdued at 29.9B against an estimate of 30.5B (prior: 35.0B). Basically, EUR weakness on Monday was a function of dollar recovery after Japanese government said that it is watching Yen move with “greater” sense of concern and is ready to act when actually needed.

Also, overall US economic data was positive for the  USD on Friday along with US DOJ (Department of Justice) indictment report for the alleged Russian disinformation campaign.

Earlier, EUR came under some pressure after reports that Ireland has withdrawn its candidacy for ECB´s vice president  and will support the Finance Minister (FM) of Spain as a “consensus” candidate. Incidentally, FM of Spain is not an economist and thus the market is concerned that likely appointment of a non-economist political figure may tarnish the image of ECB’s independence.

There is a strong buzz on the street that appointment of someone from Southern Europe like Spain could be strategic as someone from Germany is poised to take Draghi’s role next year.

Apart from politics regarding ECB’s VP post, EUR is also under pressure on news that Latvian central bank Governor Rimsevics, a member of the ECB’s governing council, was detained by the anti-graft bureau in a flurry of actions by officials, but later he was released on bail.

Overall, EZ economy is firing all the cylinders and performing well. Thus it now seems that ECB is not concerned about the strength of the currency and an eventual policy normalization. Over the last few months, ECB is increasingly shifting its focus from QE tapering to rate hikes.

Technically, EURUSD now needs to stay above 1.2350 area; otherwise, 1.2213-1.2200 and 1.2191-1.2052 may be visible soon. For any bounce back EURUSD has to sustain above the 1.2495-1.2560 zone towards 1.2595-1.2625 and the 1.2762-1.2881 area in the coming days.

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.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD hovers around 1.1100 as speculative interest prices in a dismal NFP

EUR/USD holds on to modest gains, despite discouraging EU data and slightly positive US figures. Focus shifts to US November employment figures.


GBP/USD ready to challenge May’s high

The GBP/USD pair is trading above 1.3150 and near a multi-month high at 1.3176, as Conservatives’ lead stabilized at 10 points.


USD/JPY resumes decline after faltering around 109.00

The USD/JPY is ending the day with modest losses, as despite encouraging words from US trade representatives, there’s nothing new on a trade deal with China.


XAU/USD hesitates near $1480/oz resistance

Gold kicked off December with a bullish reversal to the 1480 resistance. Just above the level the 50 and 100-day simple moving averages (SMAs) are also acting as dynamic resistances.

Gold News

USD/JPY resumes decline after faltering around 109.00

The USD/JPY is ending the day with modest losses, as despite encouraging words from US trade representatives, there’s nothing new on a trade deal with China.