THE TAKEAWAY: ECB keeps the interest rate at 0.75%-> Draghi may discuss the strong Euro is his upcoming press conference -> Euro trading unchanged
The European Central Bank left the interest rate unchanged at 0.75% for the seventh straight month following its monthly meeting. The unchanged benchmark interest rate was as expected by Bloomberg surveyed analysts. Euro traders will now look forward to the press conference with ECB President Draghi, which is scheduled to take place at 13:30 GMT.
Draghi said in January that the Euro-zone is back to a normal situation from a financial viewpoint, and the ECB has predicted an economic recovery later in 2013. Euro-zone inflation fell to 2% and within the ECB target rate in January, which would allow the ECB to continue monetary action. However, the improved economic forecast relieves pressure on the ECB to cut the interest rate further.
In Draghi’s press conference, Euro traders will look for comments about recent Euro strength. Any comments about the need to limit Euro strength or take action in Forex markets would be Euro negative. However, Draghi said in January that he doesn’t comment on exchange rates. It is even possible that no comments on the Euro exchange rate may translate as Euro bullish.
The Euro did not significantly react in Forex markets to the as-expected interest rate decision. EUR/USD is trading around 1.3562 at the time of this writing, and the pair may see resistance by a recent 14-month high set at 1.3710. Support might be seen by a broken resistance line around 1.3500.
EURUSD Daily: February 7, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to firstname.lastname@example.org .