€ EUR/USD End of Week Analysis | To Taper or not to Taper |

10 Eyl 2021

Christine Lagarde, head of the European Central Bank, alluded to a remark made by Margaret Thatcher regarding inflation, saying "the woman isn't tapering." It appears that the ECB is already starting to ease monetary policy even as the Eurozone economy emerges from the depths of the epidemic. And while it's true that the ECB's bond-buying program has been tweaked a bit, the ECB's announcement that it will return its quantitative easing pace to the period prior to March 2021 suggests that significant monetary stimulus is still on the way. According to the European Central Bank president, Christine Lagarde, this is not a "taper" but a long-term extension of asset purchases. Bond markets responded well to the absence of tapering news, although markets were not shocked. In the Eurozone, the rates on bonds and other interest-bearing instruments have dropped more quickly than in the United States, which has caused the EUR/USD to become buoyant since it has a lower yield, while other Euro crosses have suffered more.

It seems unlikely that the trading ranges now seen in the main currency crosses will shift in the near future. However, although just lately the EUR/JPY and EUR/USD rates have started to move further away from their swinging highs in July, the EUR/GBP rate seems to be making a bit more headway towards its summer lower rates. Traders should refrain from expecting an immediate drastic increase or decrease in volatility, given the present situation.