The euro dropped today against other most-traded currencies after the European Central Bank refrained from cutting interest rates and predicted that economic growth of the eurozone will remain weak.
The ECB left its main interest rate at 0.75 percent at today’s policy meeting. Some market participants have hoped that the central bank would ease its monetary policy and were disappointed by the bank’s decision. Usually, stable rates are positive for a currency, but many economists think that in the current circumstances lower interest rates would better for the eurozone. Therefore, the absence of a rate cut was viewed as negative for the euro.
The statement, which ECB president Mario Draghi made after the meeting, did not help the market sentiment either. Draghi said that “the growth momentum is expected to remain weak” and “the risks surrounding the economic outlook for the euro area remain on the downside”.
EUR/USD dropped from 1.2770 to 1.2725 as of 15:58 GMT today, reaching the lowest settlement since September 7. EUR/JPY declined from 102.13 to 101.59 and EUR/GBP ticked down from 0.7986 to 0.7963.
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