EUR/USD Higher Following Thursday’s ECB Rate Decision/Draghi Speech

March 10, 2017

Frankfurt (Mar 10)  EUR/USD is following through on Thursday’s gain in today’s trading. The pair is currently above the 1.0600 level, trading at 1.0608, a gain of 0.30% over Thursday’s North American close.

Yesterday, as expected, the European Central Bank (ECB) left all benchmark interest rates on hold following the latest Council meeting, with the main refi rate remaining at 0.0% and the deposit rate at -0.40%. According to the statement, the ECB continues to expect that interest rates will be held at present levels or lower for an extended period of time and well past the horizon of net asset purchases.

And, in his introductory statement to the post-meeting ECB press conference, President Draghi stated that risks to the region’s economic outlook are now less pronounced and the main message was that overall downside risks had eased. Draghi was more optimistic surrounding growth, but there were still doubts whether this would translate into higher inflation.

Resistance for EUR/USD still stands at the 1.0640 level, which was tested on Monday and failed. This high represents a test of the highs established at the end of February at 1.0630.

A break above this zone is required to improve the broader outlook for EUR/USD and suggest a move to the next higher resistance at the mid-February highs is possible. These highs come in at the 1.0679 level.
 
On the downside, new support has been established at Thursday’s 1.0525 low. This level is currently expected to hold during any downside price action heading into the weekend.

In the US today, Nonfarm Payrolls is on the calendar. Expectations are high, given that the ADP Employment Change came in well above forecasts at 298K. Consensus forecast was for a reading of 180K. A strong Nonfarm Payroll report would further bolster the prospects for an interest rate increase in the US next week. Although this would likely put pressure on EUR/USD, first support is expected to hold and a move to this support level could represent a buying opportunity.

Source: EconomicCalendar

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