EUR/USD whipsaws and returns back to the 1.1300 handle
There's no doubt that the ECB has taken more of a dovish tilt here and it is catching markets by surprise. The low for EUR/USD touches 1.1275 and that meets support from the 19 February lows as well as the 76.4 retracement level @ 1.1278.
However, the thing about the forward guidance revision is that it isn't going to change market pricing all too much. As mentioned earlier in the day, markets have not priced in any rate hike by the ECB this year at all. A rate hike is only planned for some time in 2H 2020 and judging by the ECB's message with TLTROs, that seems to be where they want markets to believe they may proceed in doing so anyway:
That being said, I would still expect headwinds to persist for the euro given the announcements here. A move lower in the aftermath of all of this is still rather likely at this juncture.
The ECB looks like they want to stay ahead of the curve, but by revising its forward guidance, it will take away a lot of the punch in the element of surprise from economic data if it does come about in the latter half of this year.
