Euro retreats after Draghi's comments
The euro is offside this morning after Mario Draghi stated yesterday that the quantitative easing scheme will stay in place as long as needed. The stimulus package by the European Central Bank has been in place for only few months, and when you consider how long the Federal Reserve had its QE programme in place, it is fair to say the ECB’s bond buying scheme will be around for the foreseeable future.
The upward move in EUR/USD over the past two months has been mostly dollar driven, and the dollar basket is now at its lowest level in four months as traders are less fearful of a US rate rise in June. The recent jobs data from the US has been strong, but the growth rate is still relatively weak, and the US consumer is more likely to save than spend.
In the short-term the strength of EUR/USD is unlikely to be stopped, as dovish comments from Draghi and strong jobless claims numbers from the US caused a minor pullback in the currency pair. The $1.14 level is acting as resistance — this area was a major level of support in February, and if it isn’t breeched a pullback to $1.1340 is on the cards. A move below that will bring $1.13 into play but a move back above $1.14 will put $1.15 on the radar.