ECB as you were as Draghi shrugs off higher Euro

The ECB have left rates and its APP on hold as was widely expected by the markets. However this has not stopped the Euro rallying with EURUSD breaking above the 1.2500 level, and EURGBP breaking above the short-term resistance at 0.8730. Comments on the strength of the Euro were that gave the single currency a shot in the arm, as well as ECP President Mario Draghi’s reiteration that the APP was to remain in place beyond the September ending if needed.

The statement, decision and press conference were very similar in tone from the president as the December version. The change was in the type of question he was asked as almost every journalist present asked about the impact of the stronger Euro on the Eurozone as a whole. The president’s answer was always the same, and he seemed uninterested in the Euro stating that the ECB do not focus on the currency rates. He also answered emphatically when asked whether rates would move by stating he sees very few chances that rates would rise in 2018.

The moves on both EURUSD and EURGBP were large and on both sides as an initial move through 1.2500 was followed by a retracement, which of course is not uncommon when it comes to big announcements such as this. It’s becoming incredibly difficult to pin point upside levels on EURUSD, such has been the strength of the last few weeks. However the rejection of the 1.2500 level on the hourly chart leaves 1.25 or the high of the day at 1.2535 as the next key upside level.

EURGBP is a little easier to pin point with 0.8730 breaking and leaving the previous floor at 0.8760 as the next key upside level. On the downside for EURGBP it is still important that the pair stays above the long term 61.8% fib on the weekly chart. The level is a 61.8% fib retracement of the entire move from 2017.