- EUR/USD rallies nearly 100 pips after ECB left interest rates unchanged.
- The ECB introduced new LTRO and raise bond purchases by 120 billion.
- The pair quickly reversed an early uptick to the 1.1300 round-figure mark.
The EUR/USD pair quickly reversed an early dip to the 1.1200 mark, or one-week lows and rallied nearly 100 pips post-ECB policy decision, albeit fizzled out rather quickly.
The shared currency attracted some dip-buying after the European Central Bank (ECB) decided to leave interest rates unchanged, contrary to broader market expectations of at least 10 bps cut.
Meanwhile, the ECB announced a new LTRO at 25 bps below the main refinancing operations to provide immediate liquidity and raised monthly bond purchases by 120 billion.
Given that deposit rate is already at record lows, at -0.5%, the ECB was short of options. Hence, the decision to leave interest rates unchanged might still not be seen as a big surprise.
This was evident from a sudden intraday turnaround from the 1.1300 neighbourhood, which has now dragged the pair back closer to the lower end of its daily trading range, or one-week lows.
Moving ahead, market participants now look forward to the latest staff projection. This will be followed by the post-meeting press conference, where comments by the ECB President Christine Lagarde will play a key role in influencing the near-term sentiment surrounding the common currency.
Technical levels to watch