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EUR/USD Powers Higher on Draghi’s Words

The EUR has powered higher as ECB President Mario Draghi holds his post ECB meeting press conference.   The reason many traders believe for the higher EUR this morning is due to the fact that the decision to keep interest rates unchanged was unanimous, which is different from what had happened at the last meeting in December, when there was mixed views as to the rate decision.

EUR USD Leaps on Draghi Unanimous Vote Optimism January 10 2013
EUR USD Leaps on Draghi Unanimous Vote Optimism – Click to enlarge

Draghi says the economy should gradually recover later in 2013 and that early indicators have stabilized at lower levels.   He reiterated that risks to the economic outlook are on the downside and continue to remain related to the debt crisis and geopolitical tensions.

As the EUR crossed throught the 1.3100 resistance level, triggering stop loss buying, it appears the market may have been “shorter” than initially expected.   The currency has continued moving higher in the last few minutes stopping just below the 1.3200 area.

The market has definitely taken on a “risk on” mentality and that should continue throughout the rest of today.

The other currencies are reacting to the move in the EUR as well.   USD/CHF has broken through .9200 on the downside, USD/CAD has tested the .9850 level and AUD has topped 1.0580.   After falling towards the 1.6000 area of their rate announcement the GBP is following this currency rally and has broken through 1.6060 resistance.

More charts: EUR/USD forecast.

Matthew Lifson

Matthew Lifson

Matthew Lifson is a Foreign Exchange Trader and a Market Analyst. with Cambridge Mercantile Group.