Euro stumbles as Draghi's dovish remarks spur ECB rate cut bets
EUR/USD falls under the 1.1200 handle
The euro is under renewed pressure now as Draghi comes out with the dovish hammer to knock down the single currency. With weakening inflation expectations and flagging economic growth, the signal here is that they're not going to wait to see how things play out further before sending a clear message to markets.
Following Draghi's remarks, euro area money markets have now priced in a 10 bps rate cut from the ECB by December. A full 10 bps rate cut was only seen around March 2020 at the start of this week with markets also pricing in a 15 bps rate cut by June 2020 now.
EUR/USD took a quick fall from around 1.1240 to now trade under 1.1200 and is hitting fresh lows on the day still. Further support is now seen around 1.1170 before bids are lined up around 1.1150 but technically, the near-term bias remains more bearish.
And with the ECB wanting to get ahead of the curve to introduce more stimulus it's hard to see much reprieve for the euro unless the economic outlook improves, which would require a miracle more than anything else at this stage considering global trade tensions.