Yesterday EUR/USD fell down more than 275 pips when Mario Draghi, President of ECB announced the QE plan for EURO Zone. The euro was deep under water on Friday having suffered its steepest daily fall in three years after the European Central Bank stunned markets by cutting interest rates and embarking on a trillion-euro asset-buying binge. Market was not anticipating the start of a Quantitative Easing QE program this soon. Many market analyst were of the opinion that ECB will not take any major action during its policy meeting this Thursday. Market got the surprise when Draghi announced the plan to buy financial assets starting in October. This caused EUR/USD to fall more than 250 pips in just a few hours. EUR/USD downtrend is now very strong and it can last till the start of the next year and even later if QE continues.
Market analysts are showing concerns that EURO Zone can breakup. On Thursday morning, the European Central Bank surprised markets with a raft of stimulative measures including cuts in interest rates and the commencement of asset purchases. The news sent the euro currency much lower, but currency expert Boris Schlossberg of BK Asset Management identifies another reason why the euro could call even further: fresh concerns over a European Union breakup.
Mario Draghi signaled at least 700 billion euros ($906 billion) of fresh aid for his moribund economy and left a fight with Germany over sovereign-bond purchases for another day.
What will Janet Yellen do now after what Draghi has announced his QE plans?