Interesting to know

Empty rhetoric

Even those traders who do not stick to fundamental analysis often hear statements of Mario Draghi, the ECB Governor. The regulator keeps repeating during press conferences that the high exchange rate of the euro is bad for the euro area’s economy. Such kind of statements is called verbal interventions that are done in an attempt to halt thestrengtheningof theeuro.

Looking back on the days when the words of the ECB head had impact on the EUR/USD pair’s exchange rate, we can see that this influence was quite short. Within a couple of days the pair did decrease, but such comments could not change the euro’s uptrend.

One of the obvious steps to stabilize the single currency’s exchange rate would be to introduce negative interest rates. However, Mario Draghi has a lot of words to say about how high the exchange rate is before this. So all traders can do now is to take advantage of this empty rhetoric when opening positions.  

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