ECB Holds at 1% Euro Drops

Last updated 6/4/2009 8:08 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

ECB left its overnight rate unchanged at 1% meeting market expectations , but the euro weakened slightly in the aftermath of the release as some currency traders fear that the European monetary officials may be too passive in their policy choices exacerbating the risk of prolonging the worst recession in  the region in the post war era.

Although much like the rest of the G10 universe, the EZ has seen some fundamental improvement in its economy since the start of the year, the pace of recovery has been lackluster in comparison to UK or the commodity block Commonwealth nations.   Furthermore, the recent rally in the euro stands to sabotage the recovery in the regions critical export sector.  Therefore all eyes will now turn to the 14:30 GMT press conference of ECB chief Jean Claude Trichet with markets particularly focused on the size and scope of quantitative easing  as well as the possibility of further rate cuts in the second half of the year.

EUR/USD has moved off its session highs of 1.4241 and now threatens to drop below the 1.4100 barrier.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.