The euro hit session lows against the dollar on Thursday after European Central Bank President Mario Draghi said the bank would closely monitor developments in the markets, amid concerns over the effect of the stronger euro on the economic recovery in the region. EUR/USD hit 1.3454 during European afternoon trade, the pair’s lowest since January 29; the pair subsequently consolidated at 1.3471, shedding 0.36%. The pair was likely to find support at 1.3348, the low of January 25 and resistance at 1.3576, the session high. Draghi said the recent appreciation in the single currency reflected growing signs of a return of investor confidence in the euro zone. He added that the exchange rate was at or about the long term average. Speaking at the bank’s post-policy meeting press conference Draghi said that economic weakness in the euro are would persist during the early part of 2013 but said the economy should start to recover “later” in the year. The ECB left interest rates at 0.75% earlier Thursday, in line with market expectations. The euro fell to session lows against the pound and the yen, with EUR/GBP dropping 0.73% to 0.8572 and EUR/JPY down 0.445 to 126.05. Earlier Thursday, the Bank of England left its benchmark interest rate unchanged at 0.5%. The BoE took the unusual step of releasing a rate statement following the policy meeting. The bank said it was appropriate to look beyond the fact that inflation is currently running above target, as removing stimulus would risk derailing the recovery.
EasyForexNews Research Team