Can the ECB Talk Down The EUR?

The euro has taken a beating from comments by the European Central Bank that currency strength is a concern, but it will only stay down if action follows the tough talk, analysts say.

The euro tumbled over 1 percent from a 2–1/2 year high on Thursday after ECB chief Mario Draghi said the strengthening euro was a “cause for serious concern.” He suggested the central bank would ease monetary policy next month after holding its key rate steady at 0.25 percent in May.

In early Friday trade, the single currency hovered around $1.3835, holding near the lows hit the previous session.

“The reality is that unless the ECB actually follows through on its commitment to ease come June, the euro will stay where it is or potentially move higher,” Jacob Kirkegaard, a senior research fellow at the Peterson Institute for International Economics in Washington, told CNBC.

via CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza