Fundamental Comment

Euro continues the downtrend series despite ECB intervention

Euro ECB

The euro continued to fall sharply against the dollar for the third straight session, despite the intervention of the European Central Bank (ECB) and the launch of the largest bond purchases worth 750 billion euros in an emergency meeting late Wednesday.

The EUR/USD pair hit a low of 1.0808 today, after opening the session at 1.0912, while currently trading at 1.0821, close to a three-week low of 1.0800 yesterday.

The ECB has tried to control the negative impact of the corona epidemic in the eurozone, with most of Europe closing amid the outbreak of the coronavirus, economic activity has reached an almost dead end.

This pushed the markets in a state of continuous decline, which led to a deep recession on an equal footing with the global financial crisis of 2008 and ask questions about the tenacity of the euro area in times of pressure.

ECB has come under considerable pressure to reduce borrowing costs for heavily indebted countries such as Italy, prompting it to launch a new bond-buying plan, bringing its planned purchases for this year to €1.1 trillion, with newly agreed purchases alone accounting for 6 percent of eurozone GDP.

Christine Lagarde ECB president said "exceptional times require extraordinary action “, also adding that "there are no limits to our commitment to the euro. We are determined to use the full potential of our authorized tools."

The ECB said that bond purchases would continue until the "crisis phase" of the epidemic ended and non-financial securities would be included for the first time among eligible assets.

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