EUR has rallied despite the European Central Bank keeping its main policy rates on hold and unchanging its QE programme as expected. Saxo Bank’s head of FX strategy John Hardy digests market reaction.

ECB president Mario Draghi said that “risks of deflation have largely disappeared”.

The central bank has increased its GDP forecasts for 2017 (+1.8% from +1.7% in December) and 2018 (+1.7% from +1.6% in December).   

Its inflation forecasts were upgraded for 2017 (+1.8% from +1.3% in December) and 2018 (+1.7% from +1.6% in December).