Mario Draghi, the head of the ECB, killed the euro last week.
He has been responsible for pumping trillions into the Eurozone over the last 10 years in an attempt to stimulate growth and what has he got for his efforts? Very little!
He knows that it is a weak euro that will help the Euro most but at the same time can’t admit his own policy failures or be seen to be manipulating the euro exchange rate.
So, at his press conference last week, he talked the Eurozone up first “I am doing a great job”…”The Eurozone is in great shape” and because of this “ I will be stopping QE (money printing) completely in December”… “But leaving interest rates at Zero till at least mid 2019”.
If any of this was real, interest rates would be rising in the Eurozone not staying static.
If the euro fell on some insane expectation that Draghi was going to raise interest rates last week, traders have truly lost their mind. It was never going to happen.
Draghi talked up the only risk he can lean on to help him push the Euro currency down… “Trade Wars”. It was enough and the EURUSD plunged helping both exporters and Draghi in the process.
So, where to next? In the medium term, I’m thinking 1.10 against the dollar but we could have a roller coaster ride to get there. Success in trading is not about getting a bearish or bullish view right it is about timing.
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