The EUR USD took a nosedive and Markets rallied off the back of the news that the ECB will not raise rates until at least summer of 2019 and will end QE most likely in December.
The ECB have up until now always been more vague about when they would consider raising rates but now we have a more definite date as to when they will do this.
Draghi also said that they will remain accommodating and flexible in regards to QE but only until December. But I fear this may have to be extended if we do not see increased growth in the Euro Zone in the second half of this year.
Most would have expected an opposite reaction on the markets at hearing these announcements, especially the DAX with the announcement of the end of QE, I would suspect that as we near December we will see gradual declines on the DAX and gains on the EUR USD rate. Keeping rates low is one thing, ending QE is another, but they can always ramp it up again if they have to. I also think they are behind the curve by not raising rates in case we do start to see the beginning of the next recession.
They should have raised to give them the option to lower them again if we do see the white’s of the eyes of the next recession soon.