EUR/USD Price Forecast – EUR/USD Tumbles Down As ECB Says No Rate Hikes Till Summer Of 2019

The US dollar bulls show no mercy to EURUSD pair as price movement breaches multiple support levels. The EURUSD pair is currently trading at 1.156 handle following a meltdown post ECB’s updates on central bank policy meet proceedings. Ahead of ECB meet, the pair moved as high as 1.1851 price handle in late European market hours. The central bank mentioned that if incoming data followed its forecasts, then its monthly bond purchase program would be extended through to the final quarter of the year, though at a slower pace. This means the program would likely end in December if the euro zone economy remained resilient. Until now, this quantitative easing (QE) program was scheduled to last until September, carrying monthly purchases of 30 billion Euros ($35 billion) of government and private debt. This will now be reduced to 15 billion Euros during the last three months of 2018.

EURUSD Crashes

Furthermore, the ECB also indicated that a rate hike is unlikely to come before the summer of 2019, again depending on data. However, some market players were hoping to see the first rate hike in June of next year, and not as late as the third or even fourth quarter of next year. As a result, the euro moved lower against the dollar. Nonetheless, ECB President Mario Draghi made it clear that all upcoming decisions would be determined by data. He told reporters in Riga, Latvia, that “the Governing Council concluded after a careful review that progress towards a sustained adjustment in inflation has been substantial so far”.

While USD continues to grow strong against major global counterparts, investors continue to remain cautious as they await news on US President Trump’s meeting with his advisors to discuss levying tariff on Chinese import goods.
On release front, European markets on Thursday saw its major release remain unchanged while US markets saw better than expected outcome, with core retail sales data seeing double the value (0.9%) when compared to previous data (0.4%). In today’s calendar, European market is set to see CPI data while US markets will see Industrial Productions, Michigan consumer expectations and consumer sentiment data. However investors will remain cautious across today’s trading session, monitoring progress of global events and US-China tariff related news before determining what path the pair would take moving forward for month of June 2018.