Draghi upbeat after ECB spring no surprises; Euro edges higher
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Draghi positive after ECB keep all rates unchanged
“Eurozone has grown above potential”
European indices in the green while EUR edges higher
While the latest CBRT decision may have stolen the limelight today from the ECB, there were still several noteworthy developments from the bank as it kept rates unchanged and President Draghi delivered a press conference that could be characterised as quite upbeat. Expectations for any material change in policy were extremely low and given that the accompanying statement closely resembled the prior iteration the only chance of any real fresh developments depended on the press conference. Selected comments from Draghi were as follows;
Eurozone has grown above potential for some time
1.7% inflation is consistent with our mandate
Broadly balanced assessment on the economy was unanimous, of course there were nuances
Spillovers from Turkey and Argentina have not been substantial
We haven’t changed the balance of risks about growth
These remarks overall seem pretty positive and given that there were worries that Draghi would lower growth forecasts and use emerging markets risks as reasons to push back the rate hike timeline further into 2019 he actually came across as a bit hawkish. The EURUSD rose strongly during the speech, but a look across other pairs reveals that this was more due to the USD weakness seen following the US CPI miss, than anything Euro positive.
The EURUSD rose strongly from 1:30 BST but this appears to be more due to the US CPI miss and subsequent USD weakness than a strong push higher in the single currency. The Euro remains mixed to slightly higher on the day overall. Source: xStation
On a daily timeframe a larger inverse head and shoulders may be forming which could be seen as a possible reversal signal. The falling neckline can be drawn from the July highs which would see today’s high as the first test. Unfortunately for EURUSD bulls even if price does break above this level around 1.17 then there remains a couple of potential hurdles from a swing perspective that need to be broken above before a sustained rally can occur; 1.1735 being the first and 1.1850 the more important longer term. Source: xStation
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