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ECB Does not Discuss QE: EUR/USD Rallies

The ECB held its benchmark rate at 0.05% as expected and maintained other key interest rates as well. It did not consider extensive QE. Instead Draghi focused on ABS purchases and said it would do it for 2 years instead of 1. This could be in place of QE, but is in a way QE-lite. 

ECB President Mario Draghi

Perhaps, the absence of a discussion about an expansive QE program is seen as not dovish. Though, I would not say today's ECB communication was hawkish at all. It might not be as dovish as a full scale QE would be, but the bank is clearly pressured to continue stimulus measures. 

In any case the market is reacting slightly EUR-positive. The EUR/USD held above an overnight support pivot at 1.2613. It rallied and cracked the previous high of 1.2674. If price can push through 1.2675 we can expect an extension at least toward the 1.2725-30 area, where the 200-hour SMA resides.

(EUR/USD 1H chart 10/2)

A break below 1.2570 however opens up the next support factor, which could be at 1.2460, 78.6% retracement of the 2012-2014 rally (1.2042-1.3993)