The EUR/USD currency pair is once again under pressure in today’s trading session after hitting a fresh yearly low at 1.0757 in yesterday’s trading session after a dovish tone by ECB president Christine Lagarde left the market predicting that there will be no interest rate hikes from the European bank any time soon.
In yesterday’s interest rate decision, the European Central Bank (ECB) left interest rates on hold, well in line with the market expectations but it was the pessimistic tone from Lagarde where she mentioned she was in no hurry to raise rates that left the Euro reeling.
"In the current conditions of high uncertainty, we will maintain optionality, gradualism and flexibility in the conduct of monetary policy," ECB President Christine Lagarde said in a monetary statement
"We'll deal with interest rates when we get there," she added.
The dovish stance on monetary policy may be backed up by a troublesome situation in Europe due to a higher inflation rate, which is 7.5%, and a slow growth rate amid the Ukraine crisis. The situation is going to get worsened for the ECB as the oil prices are set for the next upside move and energy bills will haunt the households in Europe.
Looking ahead today, there is not a lot of important news on the economic calendar to drive the EUR/USD currency pair so the main focus will be on the conflict between Ukraine and Russia with market participants eying any escalation.
The escalation may be forthcoming after Ukraine caused a missile attack against one of Russia’s prized warships which eventually sunk which may trigger a strong response from the other side.