ECB extends QE and the Euro… soars 2% vs the Dollar???

Well it isn’t exactly the January Swiss Franc 20% spike, but the Euro surprised traders today by jumping more than 2% versus the US Dollar during the European Central Bank (ECB) meeting and press conference, hitting a four week high of 1.089.

John Hardy, Saxo Bank

John Hardy, Saxo Bank

The EURUSD had actually been sliding during the day until details of the ECB’s extended QE program came out. The ECB apparently failed to communicate to the market before the meeting, causing massive disappointment. And its not just Forex, but all asset classes have been hit.

Given the abruptness of the Euro spike, and its size, it is likely that there will be some fallout among both FX brokers and traders once the dust settles. Did people learn their lesson about the importance of risk management from the CHF January spike?

The following video explaining what happened is courtesy of John Hardy, Saxo Bank’s head of FX strategy. Hardy also takes a look at where the EURUSD might go from here.

More of Hardy’s analysis can be seen here.

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