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FOREX Watch: Euro hits weekly lows on ECB, US data

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FOREX Watch: Euro hits weekly lows on ECB, US data

The euro was entrenched in negative territory Thursday as investors reacted to latest testimony from European Central Bank President Mario Draghi. In remarks that followed the ECB rate decision, where it was revealed interest rates would be left unchanged at 0.5 percent, Draghi indicated the central bank’s monetary policy would remain accommodative for an extended period in an effort to spur investment. Draghi has previously stated further rate cuts were on the table should the currency zone fail to gain traction in terms of growth. For the time being, however, the central bank appears content to let the economy run its course following a series of upbeat data reports from Germany, the monetary union’s largest member.

The euro was under pressure following a second consecutive day of upbeat US data. Like Wednesday’s GDP and ADP employment reports, Thursday’s manufacturing PMI and initial jobless claims beat expectations, sending the greenback soaring. The US dollar advanced more than 0.6 percent against the euro in the North American session, sending EURUSD to 1.3220, a weekly low. A breakdown of the psychological 1.32 level would target 1.3166 (the low from July 25). The trend index continues to show a slightly bullish market for this pair, although a breach of 1.32 is likely to shift the market’s sentiment toward this pair.

The euro lost ground on the British pound following a decision by the Bank of England to keep interest rates steady. The BoE left the size of its asset purchases unchanged at £375 billion. The UK continued its recent run of positive reporting by posting better-than-expected manufacturing PMI, reflected in the monthly survey by Markit Economics. The EURGBP declined to a session low of 0.8770 in European before consolidating at 0.8740 in the North American trade.

The one bright spot for the euro Thursday was its trade against the yen. The EURJPY soared more than 1 percent to 131.4663 on the back of a 2.5 percent rally by the NIKKEI Index.

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