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Forex - Euro rallies vs. dollar after ECB’s Draghi

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Shutterstock photo - The euro rallied more than 1% against the dollar on Thursday after European Central Bank President Mario Draghi said monetary policy will remain firmly accommodative in a less dovish than expected press conference.

EUR/USD hit 1.3116 during U.S. morning trade, the pair's highest since March 1; the pair subsequently consolidated at 1.3099, rallying 1.02%.

The pair was likely to find support at 1.2965, the session low and a three-month low and resistance at 1.3146, the high of February 27.

Speaking at the ECB's post-policy meeting press conference, Draghi said policymakers discussed a rate cut but the "prevailing consensus" was to leave interest rates unchanged at 0.75%.

Draghi said that inflation expectations remain firmly anchored but added that there is evidence that economic weakness has extended into the early part of this year.

The ECB revised down economic forecasts for 2013, with euro zone gross domestic product now expected to contract by between 0.1% and 0.9% from a previous forecast for growth of between 0.3% and a contraction of 0.9%.

The euro advanced to session highs against the pound and the yen, with EUR/GBP climbing 0.84% to 0.8709 and EUR/JPY jumping 1.57% to 123.88.

The Bank of England voted to leave interest rates on hold at a record low 0.5% and keep the size of its asset purchase program unchanged at GBP375 billion earlier Thursday.

Elsewhere, the Bank of Japan left the size of its asset purchase program on hold at JPY76 trillion at Governor Masaaki Shirakawa's final meeting before incoming governor Haruhiko Kuroda takes over next month.

In the U.S., the Department of Labor said the number of individuals filing for initial jobless benefits fell by 7,000 to a seasonally adjusted 340,000 last week, compared to expectations for an increase of 8,000 to 355,000.

A separate report showed that the U.S. trade deficit widened to a seasonally adjusted USD44.5 billion in January from a deficit of USD38.1 billion the previous month. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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