European session review: EUR strengthens after ECB’s monetary policy decisions

EUR rose against most other major currencies in the European session on Thursday as the European Central Bank (ECB) made no changes to its policy stance, putting pressure on the EU leaders to overcome their differences on the region's recovery fund.

At its latest monetary policy meeting, the ECB’s policymakers decided to leave its key interest rates unchanged, as widely expected. The Bank also pledged to continue its purchases under pandemic emergency purchase programme (PEPP) with a total envelope of EUR1,350 billion. The purchases under the PEPP are to be conducted until at least the end of June 2021 and, in any case, until it judges that the coronavirus crisis phase is over. In its policy statement, the ECB also noted that its latest operation in the third series of targeted longer-term refinancing operations (TLTRO III) had registered "a very high take-up of funds". The Bank also promised to continue to provide ample liquidity through its refinancing operations as well as to continue purchases under the asset purchase programme (APP) at a monthly pace of €20 billion, together with the purchases under the additional €120 billion temporary envelope until the end of the year.

The announced outcomes were in line with markets' expectations and had little impact on the performance of the European single currency, which gained on hopes for a quick resolution of the disagreements over the EU's recovery fund. It is expected that the ECB's decision to keep policy on hold, will put pressure on the European political leaders to agree on a proposed massive recovery plan for the region at a Friday-Saturday conference in Brussels.

Now, market participants are watching the press conference of the ECB’s president Christine Lagarde, which started at 12:30 GMT.