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Mikael Milhoj, Senior Analyst at Danske Bank, gives his opinion on yesterday’s bull run in spot on Draghi’s comments.

Key Quotes

“Yesterday saw a volatile EUR session with EUR/USD spiking on the back of Draghi’s hawkish comment of a ‘relatively vigorous’ forthcoming pickup in core inflation”.

“The EUR/USD rally, however, faded ahead of the important 1.1851 resistance level and at the end of the session, the cross had erased most of its gains”.

“The move highlights an important point: namely that a change in ECB monetary policy marks an important leg in our call for an eventually higher EUR/USD”.

“For now, there is still a long time to our call for the first rate hike falling in December 2019, but we should follow ECB communication closely as there has been a slight shift in rhetoric towards a more hawkish bias recently”.