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EUR/USD – How Low Can It Go?
Mario Draghi dropped the boom on the EUR/USD today taking the pair down by more than 200 points today in the most volatile trading in more than three months. Mr. Draghi made it very clear that he was prepared to use all the tools necessary to increase QE and even take deposit rates into further negative territory in order to stimulate the economy in the moribund region.
Although Mr. Draghi used the inflation mandate as an excuse for this possible policy shift, the fact of the matter is that ECB is trying hard to stimulate growth and more importantly keep the exchange rate competitive for the European export sector.
Tomorrow the market will get a glimpse of the Flash PMI data which will provide investors with a latest reading of the conditions on the ground. If the number miss -- worse if they slip below the 50 boom/bust level the market will become convinced that more QE is coming and the 1.1000 level will quickly crumble in its wake.