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Euro Rallies Higher Against US Dollar on Mario Draghi Speech

January 25, 2018 at 15:22 by Simon Mugo

Stack of one-euro coins on a chartThe euro today rallied to new 3-year highs against the US dollar after the European Central Bank left interest rates unchanged. The single currency initially headed lower after the ECB rate decision, but rallied to new highs after Mario Draghi‘s speech at the ECB’s press conference in Frankfurt.

The EUR/USD currency pair today gained over 140 points from its opening low of 1.2385 to hit a high of 1.2536 after Draghi’s speech.

The currency pair initially headed lower after the ECB’s Governing Council left its monetary policy intact with the main interest rate being left at 0.00%. The council also maintained the marginal lending facility interest rate at 0.25% and the deposit facility was maintained at -0.40%. The pair rallied higher after ECB President Mario Draghi outlined an upbeat assessment of the current fundamentals in the Eurozone during his press conference. Draghi also noted that risks in the euro area were quite balanced, while at the same time stressing the need for structural reforms in relation to fiscal policies.

The currency pair also rallied higher after disappointing US releases such as the weekly insurance claims data by the Department of Labor and the weak new home sales data, released by the Census Bureau. The jobless claims were recorded at 233,000, which was slightly lower than the expected 235,000, while the new home sales for December came in at 625,000, as compared to the expected 675,000 units.

The currency pair’s future performance is likely to be affected by tomorrow’s US advance goods trade balance, GDP print, and durable goods orders.

The EUR/USD currency pair was trading at 1.2516 as at 15:18 GMT having rallied from a low of 1.2385. The EUR/JPY currency pair was trading at 136.05 having risen from a low of 135.00 earlier today.

If you have any questions, comments, or opinions regarding the Euro, feel free to post them using the commentary form below.

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