Following the meeting, the ECB Board of Governors decided to extend all anti-crisis measures, as well as to increase the volume of asset redemption by 500 billion euros. But the ultra-soft monetary policy was powerless to stop the growth of the euro, which for the first time in 2.5 years fixed above the $ 1.2 mark – a conditional “pain threshold” for the ECB. There is growing confidence in the market that further QE will not be able to leave the strengthening of the euro, and the ECB has exhausted all possible instruments.
Has the ECB lost control of the situation, and how long can the growth of the EUR / USD pair last? AMarkets experts answered the question of Fortrader magazine.
– The current dynamics of the EUR / USD pair is not determined by the ECB policy. The main impact on the euro is dollar weaknessas well as general market optimism amid reports of the start of coronavirus vaccination. As a reminder, England was the first region to start using an experimental vaccine from Pfizer. Market participants hope that in the very near future the drug will gain wider distribution, which will help restore economic activity, as well as improve the prospects for global economic growth.
As for the American currency, then its sales may continue… Expectations of additional easing of US monetary policy, as well as a new package of fiscal stimulus from Congress, which together will add several more trillion dollars of stimulating liquidity to the economy, will contribute to this. It is not surprising that against this background, traders are again worried about inflationary risks in the US.
The last week ECB meeting can also be described as another catalyst for the growth of the European currency. Recall that the head of the ECB Lagrad, commenting on the exchange rate of the euro, heaped it more than acceptable and does not pose a threat to the price stability of the Eurozone. In other words, the European regulator is ready to continue the growth of the EUR / USD pair.
According to Citi analysts, the main currency pair may reach 1.25 by the end of this year.