ECB to end the bond-buying program in December

Chris L
Category:  Financial News
The European Central Bank hinted that it would likely end its bond-buying program in December after starting a tampering process on September. ECB maintained its interest rates with no changes at 0%.

The ECB affirmed that its program would be reduced from 30B in September to 15 billion euros in the last quarter of the year, and if data comes as expected, it would be extended only until the end of 2018. 

In the same framework, the central bank said that a rate hike wouldn't come before the summer of next year. 

In his press conference, ECB president Mario Draghi affirmed that he sees substantial progress in inflation and he is confident that prices will continue heading to the ECB objective of 2.0%. Prices projections are at 1.7% yearly inflation for the next three years. 

Concerning growth, the ECB expects the eurozone will grow 2.1% in 2018 after a downward revision from last meeting expectations; then 1.9% in 2019 and 1.7% in 2020. 

Draghi also commented that growth moderation is due to temporary factors like a pullback from record highs and seasonal conditions.

Overall, Mario Draghi tone was dovish as the president wanted to express caution on the next developments. 

EUR/USD falls to 1-week lows

The dollar reacted up after the ECB rate decision as the DXY jumped from 93.20 to trade at highs since June 5 above 94.00. The euro, on the other hand, is trading on the defensive. 

The EUR/USD fell from the 1.1800 levels to trade at 1-week lows around 1.1670 following the dovish tone of the decision and press conference. The cross is trading now 1.90% down on Thursday. 

Technically, the pair is overbought, but momentum is pointing to the south. The 50-day moving average is deepening below the 200-day MA. The big picture shows that EUR/USD is starting a new downtrend that would lead the pair to the 1.1600 area. 

If the pair consolidates losses beyond the 1.1700 area, it will find supports at 1.1620, 1.1600 and then the critical 1.155 and 1.1510. 
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