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EUR/USD pressures stacked up post ECB - BTMU

FXStreet (Guatemala) - FX Strategists at the Bank of Tokyo Mitsubishi UFJ noted that the euro had weakened modestly against the US dollar following today’s ECB monetary policy meeting and moved back below the 1.2500-level.

Key Quotes:

"The euro has been undermined by the ECB’s strengthened commitment to raise the size of their balance sheet back towards levels from March 2012 when it totalled around EUR3.0 trillion compared currently to just over EUR2.0 trillion."

"ECB President Draghi stressed that the ECB’s balance sheet will diverge with other major central banks in the coming years supporting our outlook for a weaker euro. The ECB explicitly signalled that its’ asset purchase programme will last at least two years."

"The ECB also provided a signal that it may ease monetary policy further as early as at their next policy meeting by stating both that: i) the “council has been tasked with preparing further measures if needed” and ii) that they see “indications for downward revisions to staff forecasts”."

"ECB President Draghi did not expand on what further measures the council has been tasked with preparing. Heightened investor expectations for further ECB monetary easing in the near-term will likely continue to weigh on the euro in the week ahead. In contrast, the US dollar is likely to derive further support from the release of a strong non-farm payrolls report for October keeping downward pressure on EUR/USD."

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