The Australian dollar was slightly corrected, because estimates of inflation in Australia and China were considered rather disappointing by market participants. The Australian dollar weakened around 0.2 percent to as low as 0.7156 against the US dollar in mid-European trading session, and began to move away from the highest level reached in trading on Wednesday. The Reserve Bank of Australia (RBA) deputy governor indicated he would be patient before cutting interest rates.

ECB Maintain Monetary Policy, Euro Declines Limited

The ECB monetary policy and Mario Draghi's statement still show zero hope for a return to monetary tightening. The euro also weakened.  The European Central Bank (ECB) maintains its interest rates in April 2019, with the deposit interest rate maintained at -0.40 percent, while the Marginal Lending Facility interest rate remains in the range of 0 percent. This is the central bank's attempt to push inflation upward and stimulate growth. "We still expect the interest rate to remain at its current levels, at least until the end of 2019, (or) as long as needed, to ensure the convergence of continued inflation to our destination," said ECB President Mario Draghi, in his press conference at Frankfurt.

Eurozone is Hampered By Weak Economic Data

The policy was taken after the International Monetary Fund (IMF) cut its Eurozone economic growth forecast. The European Central Bank was forced to turn around from monetary tightening at the end of last year because of the bleak economic climate that was not supporting.

Mario Draghi also warned that data compiled by policy makers in recent weeks had confirmed the slowing momentum of growth in the Eurozone. "Future data is still weak, especially from the manufacturing sector. The slowing growth momentum is expected to continue this year," Draghi added. In addition, economic uncertainty related to geopolitics, protectionism, and the conditions of emerging markets turned out to have a negative impact on investor sentiment in the region. Draghi added that negative risks will increase in the next few months. 

Euro Down Limited

The ECB President's statement was considered to contain a dovish Outlook. As a result, moments after Draghi spoke, the Euro slumped. However, the decline is only limited. Apart from the absence of the threat of recession in the Eurozone, the US Dollar is also weakening due to the release of US Inflation data and the escalation of global trade conflicts. When this news was written, the EUR / USD hourly frame bounced back to the level of 1.1266, after briefly falling to a low of 1.1228.

Investors Remain Optimistic

The release of a number of disappointing US economic data on Friday has triggered a phenomenal change in the formation of the US yield curve. Short-term bond yields increase, while long-term bond yields decline. As a result, the spread between US 3-month bond yields and 10-year bond yields entered negative territory. 

In fact, the reversal of the bond yield curve is seen as one of the leading indicators for the economic recession in Uncle Sam's country. Concerns about the recession triggered a flight of funds from the US dollar, but did not push up demand for safe haven currencies such as the yen and franc significantly. The majority of investors and traders still seem to be optimistic about the future economic outlook. Although the major central bank is expected to take a dovish pose, the recession is expected to be avoided.

Previously, changes in the formation of US bond yield curves resulted in an escalation of concerns about a slowdown in the world economy, which weighed on market risk. However, now an important indicator that measures market’s concerns, has slipped back.