ECB President Mario Draghi’s press conference has certainly stirred up the EUR market. EUR did reach a high of 1.3088 but has since eased a bit. No doubt there were many short positions that were stopped out as EUR broke the 1.3055 level.
So what did he say? Well at first the EUR slipped to the 1.2990 level before quickly running to its highs in a matter of minutes. President Draghi stated that inflation has declined further than expected and that expectations “remain anchored”. He believes the economy will eventually recover in 2013. He also stated that the ECB continues to monitor the impact of LTRO repayments on the money markets. He did downgrade growth forecasts for 2013 and 2014, but that comment seems to have gone unnoticed.
He also stated that ECB monetary policy will remain accommodative and that “continued implementations of structural reforms should work their way through the economy”.
His comments have analysts now believing there is no rate cut coming from the ECB in the forseeable future. It should be noted that this is a consensus of ECB officials and is not unanimous.
One other item of note; the USD/JPY has surged as the ECB President was speaking as short EUR/JPY positions were closed and reversed.
EUR seems primed to break the 1.3100 level and could test major resitance at 1.3150.
USD/JPY has breached resistance at 94.60, but has retraced a bit.
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