EUR/USD Price, News and Analysis:
- EUR/USD[1] slumps to 1.0750 after ECB announces EUR750bn of Pandemic-QE
- IFO predicts German Q2 GDP to slump to -4.5%.
EUR/USD Throws in the Towel and Breaks Technical Support
We wrote yesterday that the ECB needed to respond the economic threat posed by the coronavirus immediately, and later in the day the central bank did just that, announcing a fresh EUR750bn pandemic QE program[2] to run through until at least the end of 2020. The ECB also left open the door for further monetary action if needed:
“The Governing Council will do everything necessary within its mandate. The Governing Council is fully prepared to increase the size of its asset purchase programmes and adjust their composition, by as much as necessary and for as long as needed. It will explore all options and all contingencies to support the economy through this shock.”
Euro Struggles to Hold 1.1000 Against a Rampant US Dollar[3]
Further action may be required if the latest predictions by the German IFO materialize. While global second-quarter GDP figures are expected to show recessionary forces building, IFO’s estimation of Q2 German GDP at minus 4.5% is aheadline-grabbing prediction and one that policy makers need to heed. German unemployment is also expected to rise from 5.0% in 2019 to 5.3% in 2020.
IFO Economic Forecast Spring 2020 – The Economy Slumps[4]
The US dollar[5] (DXY) continues to rise to fresh highs and a break above 103.85 will see the greenback at highs last seen in 2003. The US dollar is the dominant safe-haven of choice and is likely to remain so in the short-term.
Against these forces, EUR[6]/USD[7] has finally broken lower, opening the way for
