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Draghi repeats worries – EUR/USD pressured

The president of the ECB, Mario Draghi, is  testifying before a committee of the European Parliament.

EUR/USD traded lower, struggling with 1.25 and is now taking another leg down under 1.2480.

Draghi says:

  • Most recent forecasts have been revised downwards
  • Expecting a moderate recovery in 2015-2016.
  • Demand supported by monetary policy stimulus, among other events.
  • High unemployment, unutilized capacity and balance sheet adjustments weigh.
  • Risks are on the downside.
  • Geopolitical risk could dampen confidence and investment.
  • Inflation in the euro-are remains very low – expected to remain at these levels before rising in 2015-16.
  • We closely monitor developments
  • Money growth rate has increased moderately.
  • The turning point in credit growth is behind us.
  • Fragmentation has receded significantly since the peak of the crisis.
  • Since the beginning of June, market money rates are  declining – a result of monetary policy.
  • EONIA is not expected to exceed 0.25% before 2018.
  • Other rates are low.
  • Compression of spreads extended after September announcements.
  • Balance sheet expected to return to 2012 dimensions
  • Our measures are set to bring inflation to target.
  • We will stay alert.
  • GC  unanimous to use additional unconventional measures to reach targets, and tasked staff to make preparations.
  • Draghi is basically repeating his words from the  recent rate decision, in which he defied  discontent.
  • Structural reforms are needed.
  • Banking union should be completed after the stress tests.
  • New low is 1.2472. Support awaits at 1.2440.
  • LTRO helped in stabilizing the collateral framework.
  • Draghi goes on to talk about the collateral system and away from monetary policy.
  • 2015 is the year when everybody must work together to return the euro-zone growth to track.
  • Questions begin: the first question in Spanish is about the trillion euro expansion of the balance sheet.
  • Answer: we stand ready to do more, unconventional measures.
  • Fiscal and monetary expansion cannot do the job alone without structural reforms.
  • Draghi continues answering questions unrelated to monetary policy, but EUR/USD continues  falling to 1.2460 on USD  strength.

Earlier, a fellow member at the European Central Bank, Yves Mersch, opened the door to a wide variety of financial  instruments that the ECB could buy, including state bonds, ETFs, shares, etc.

Another colleague, Praet, said that  the fiscal position in the euro-zone should be  neutral or slightly expansionary in 2015. He also said that the lack of investment from firms is the weakest link of the euro-zone recovery.

In the US, the Empire State Manufacturing number fell below expectations with a score of 10.2 points.  Industrial output was expected to rise by 0.2% after 1% last month.


EURUSD pressured by Mario Draghi November 17 2014 technical 30 minute forex chart

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.