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Euro crumbles as ECB cuts rates

FXStreet (Córdoba) - The euro slumped across the board, sending EUR/USD to its lowest level in 14 months and EUR/CHF dangerously close to the SNB floor, after the European Central Bank decided to cut interest rates, a move that wasn’t anticipated by markets.

The Governing Council of the European Central Bank decided to cut the main interest rates by 10 bps at today’s meeting today. The interest rate on the main refinancing operations was cut to 0.05% from 0.15%, the rate on the marginal lending facility was cut to 0.30% from 0.40%, while the deposit rate was cut to -0.20% from -0.10%.

Market was expecting monetary stimulus in the form of QE so the rate cut came as a surprise. All eyes will be on ECB President, Mario Draghi, who will comment on the considerations underlying these decisions at a press conference starting at 12:30 GMT. “We will know whether this was the prelude to another monetary policy fireworks or just the easiest way out to prevent QE without a loss of face”, said Carsten Brzeski, analyst at the ING Bank.

EUR/USD broke through 1.3100 and hit its lowest since July 2013 at 1.3022. EUR/JPY and EUR/GBP fell sharply and erased almost completely their weekly gains falling to 136.90 and 0.7935 respectively. EUR/CHF hit a 1-week low of 1.2052 and approaches the SNB floor of 1.2000.

EUR/AUD printed a 14-month low of 1.3922, while EUR/CAD fell to a 9-month low of 1.4155. The shared currency also slumped against the kiwi and scandies.

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