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ECB reaction and press conference

The reaction in the FX markets to a mere 10bp cut in interest rates reflects 2 things. Firstly, that this was generally unexpected by the markets. Secondly, a perception that the ECB is more aware of the deflationary risks facing the eurozone economy and prepared to do whatever it takes to ensure that they do not come to fruition. Further losses on EURUSD possible if we see fresh indications that the ECB is preparing to push ahead with asses purchases of some sort or another.

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