Technical Bias: Neutral
- EURUSD reaches daily high of 1.0946, consolidates around the 1.09 mark.
- ECB President Mario Draghi gives positive assessment of Eurozone recovery and inflation expectations.
- Eurozone consumer confidence reaches highest level since July 2007.
The EURUSD continued to push higher on Monday, as ECB President Mario Draghi gave an upbeat assessment of the euro area economy.
The EURUSD selloff paused last week after the United States Federal Reserve undercut rate-hike expectations. The pair climbed more than 300 pips, capping off one of its strongest weeks this year. The EURUSD continued to push higher on Monday, advancing 0.45 percent to 1.0891. The pair was unable to breach the 1.0920 resistance after posting an intraday high of 1.0946.
The short-term technical indicators confirm a trend reversal for the EURUSD, which appeared headed for parity only a few short weeks ago. Long-term, however, the outlook on the euro remains weak.
European Central Bank President Mario Draghi testified before the European Parliament’s Economic and Monetary Affairs Committee on Monday. Draghi gave a positive assessment of the economic recovery and said inflation is expected to increase gradually toward year-end.
“The most recent data and survey evidence show that growth is gaining momentum. The basis for the economic recovery in the euro area has clearly strengthened. This is due to in particular the fall in oil prices, the gradual firming of external demand, easy financing conditions driven by our accomodative monetary policy, and the depreciation of the euro,” Draghi said in a prepared statement in Brussels on Monday.
The “accommodative monetary policy” Draghi is referring to is the ECB’s quantitative easing program, which was unveiled back in January and put into motion earlier this month. The program will push €1.1 trillion into the financial system over the next year-and-a-half in an effort to stave off deflation and promote consumption. The QE program was announced after several rate cuts had failed to generate the momentum needed to avoid deflation.
Draghi added, “The latest ECB staff projections foresee average inflation at 0.0% in 2015, rising to 1.5% in 2016 and 1.8% in 2017.”
In economic data, Eurozone consumer confidence in March rose to its highest level in nearly eight years, underscoring the region’s improving economic climate. The consumer confidence index climbed to -3.7 in March from -6.7 in February, the European Commission reported on Monday. That was the highest level since July 2007.