- ECB leaves rates unchanged as expected.
- Draghi says the monetary union is fragile.
- US Dollar Index advances to 10-week highs above 96.50.
After rising to a daily high of 1.1432 during the first half of the ECB president Mario Draghi’s press conference, the EUR/USD pair lost its traction and quickly retraced its upside to touch its lowest level since August 17 at 1.1370. As of writing, the pair was trading at 1.1385, losing 0.06% on a daily basis.
As expected, the ECB decided to leave its policy rate unchanged and reduced monthly QE purchases to $15 billion until the end of the year. While delivering his prepared comments, Draghi recognized the weak data but said that they were still expecting the underlying inflation to pick up towards the end of the year. Responding to questions about the situation in Italy, Draghi said that the monetary union was fragile to trigger a euro sell-off.
On the other hand, today’s data from the United States showed that durable goods orders increased by 0.8% in September to beat the analysts estimate for a 0.9% decline by a wide margin. Other data revealed that the trade deficit rose to $76.04 billion from $75.83 billion in August. Boosted by the data and the shift of market demand from euro to the buck, the US Dollar Index rose to its highest level in 10 weeks at 94.60 and was last seen up 0.2% on the day at 95.56.
Later in the session, FOMC members Clarida and Mester are scheduled to deliver speeches. Furthermore, the Federal Reserve Bank of Kansas will publish its regional manufacturing report.
Technical levels to consider
The initial support for the pair aligns at 1.1370/65 (daily low/Aug. 17 low) ahead of 1.1325 (Aug. 14 low) and 1.1300 (Aug. 15 low). On the upside, resistances could be seen at 1.1430 (daily high), 1.1480 (Oct. 24 high) and 1.1500/05 (psychological level/20-DMA).
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