EUR/USD traders ran for the exists on both sides of the trade as a report by the Wall Street Journal alleges that the European Central Bank (ECB) is going to announce a bond-buying program after its meeting tomorrow.
According to sources cited in the report, the ECB could be committing as much as €50 billion per month in a quantitative easing program which could last at least a year.
The proposal allegedly comes from the executive board of the ECB, which could play a key role in the decision making process at tomorrow’s ECB meeting. Arguably, the news has already been priced into the market after recent reports circulated across various media outlets suggesting a figure between €500 and €600 billion is on the line.
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If the ECB delivers tomorrow on these expectations, the european currency unit could rally across the board in a typical “buy the rumor, sell the fact” scenario. In the aftermath of the WSJ report, the EUR/USD rate dropped to session lows around 1.1565. After the knee-jerk reaction some short covering prompted a rebound of more than one cent to 1.1679.
Currently, the EUR/USD is changing hands around 1.1600, awaiting further news from the European Central Bank tomorrow.