EUR/USD Weakens After ECB Stimulus Fails to Reassure Markets
Arslan Butt • 1 min read
The Euro is still trading weak against the US dollar a day after the ECB announced its stimulus measures to protect the Eurozone economy from possible weakness driven by the coronavirus outbreak. At the time of writing, EUR/USD is trading around 1.118.
On Thursday, the European Central Bank announced that it would increase lending to banks and ramp up its asset purchase program by an additional 120 billion euros. However, markets were disappointed by its decision to keep interest rates on hold at -0.50%, unlike several of its peers that have cut rates recently.
In comparison, the US looks set to take more measures towards protecting its economy in the wake of the coronavirus outbreak, which recently became a pandemic officially. On Thursday, the New York Fed announced additional liquidity in short-term lending by $1.5 trillion and also confirmed that it would add maturities to its Treasury purchases to offset any panic reaction in financial markets.
EUR/USD turned even more bearish as the market sentiment deteriorated and traders turned to the dollar as a preferred safe haven currency as a result of the heightened uncertainty in the markets.