ECB: An unequivocal gloomy message and a commitment to act, next euro moves depend on covid

ECB President Lagarde has laid down a gloomy picture of the economy under the second covid wave sending EUR/USD to the lowest in a month at 1.1679. The EUR/USD pair is set to remain under pressure and focused on coronavirus statistics, FXStreet’s Analyst Yohay Elam reports.

Key quotes

“The Frankfurt-based institution's decision is taking place one day after both Germany and France announced new lockdowns to stem the surge of COVID-19. Lagarde acknowledged the danger in full, saying that the virus resurgence presents new challenges and already causes caution on the part of consumers. It is also weighing on business sentiment and may cause fourth-quarter Gross Domestic Product to turn negative. Lagarde noted that high-frequency data is clearly pointing to softening.”

“The ECB's mandate is price stability, and there is no silver lining from that front – the Consumer Price Index is set to remain negative until early 2021.” 

“The bank clarified the tie between covid, the economy, and its policy. Therefore, the next moves by the common currency depend on virus figures – and if they result in more restrictions or a gradual return to normality.  For EUR/USD, the next immediate moves heavily depend on the US elections, where uncertainty is reaching higher levels.”