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EUR/USD marks triple bottom on Draghi’s dovishness

EUR/USD is entrenched in a range, but at least it is a predictable one. After an attempt to move to the upside, the pair dropped  back down within the well-known levels before hitting 1.0630. For the third time in recent days.

The reason for the downfall came from the President of the ECB Mario Draghi. Contrary to some of his more upbeat colleagues, the Italian head of the Frankfurt-based institution seems reluctant to withdraw monetary stimulus.

He said that a reassessment of monetary policy is not warranted. Others want to end bond buys this year or even begin raising rates before QE reaches its end.

Here is a key passage from his speech:

Before making any alterations to the components of our stance – interest rates, asset purchases and forward guidance – we still need to build sufficient confidence that inflation will indeed converge to our aim over a medium-term horizon, and will remain there even in less supportive monetary policy conditions.

In the meantime, US data came out better than expected: weekly jobless claims dropped to 234K. The fall came after a few worrying months on higher ground. In theory, this should have helped the pair drop under 1.0630, but it never materialized.

Does the resilience of the single currency imply it is heading for a big rally? A lot depends on the US jobs report tomorrow. See how to trade the NFP with EUR/USD.

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.