- ECB leaves benchmark interest rate unchanged at 0% on Thursday.
- ECB President Draghi says Governing Council did not discuss rate cuts.
- US Durable Goods Orders rebound sharply in June.
With the initial reaction to the European Central Bank's policy statement, The EUR/USD pair lost its traction during the European trading hours and slumped to its lowest level in more than two years at 1.1101. However, the pair quickly reversed its course during ECB President Draghi's press conference and climbed to a daily high of 1.1187. Following these sharp fluctuations, the pair has started to consolidate its daily gains and was last seen trading at 1.1160, adding 0.2% on the day.
Draghi stole the spotlight
As expected, the ECB announced that it kept its policy rate unchanged at 0%. In its statement, however, the bank noted that it tasked the relevant Eurosystem committees with assessing options to be used if medium-term inflation consistently remained below the ECB's target. According to the statement, these options include ways to reinforce its forward guidance on policy rates, mitigating measures, and options for size and composition of potential new net asset purchases.
During the presser, Draghi adopted a neutral tone, saying that they need to see more data before making a change in the policy and told reporters that the Governing Council did not discuss a rate cut at this month's meeting and repeated that the risk of a recession in the eurozone was still very low.
Commenting on the market reaction to the ECB statement and Draghi's remarks, "While EURUSD traded briefly to a new cycle low, spot’s pullback into previous ranges suggests most key elements of the ECB’s July meeting were in the price. We expect market attention to pivot rapidly to next week’s FOMC meeting," said TD Securities analysts.
"This suggests a sideways trajectory may prevail into that event as investors weigh a precarious balance of medium-term risks."
US data came in better than expected
Ahead of tomorrow's critical GDP data, the US Census Bureau today reported that Durable Goods Orders in June expanded by 2% to beat the market expectation for an increase of 0.7%. Although the EUR/USD pair's rally made it difficult for the US Dollar Index to stretch higher, it remains in the upper half of this week's range and was last seen posting small daily gains above 97.70.
Technical levels to watch for
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD drops below 1.0800 after German Retail Sales data
EUR/USD has come under fresh selling pressure and trades below 1.0800 after the data from Germany showed that Retail Sales declined by 1.9% MoM in February. Resurgent US Dollar demand is adding to the downside in the pair. US data are next in focus.
GBP/USD stays weak near 1.2600 amid market caution
GBP/USD remains defensive near 1.2600 in European trading on Thursday. The hawkish tone from Fed Governor Christopher Waller keeps the US Dollar afloat amid a cautious trading environment ahead of key US data releases and the Good Friday trading lull.
Gold price holds strength ahead of US core PCE inflation
Gold price holds onto gains near $2,200 in Thursday’s European session. The precious metal exhibits firm footing ahead of the United States core PCE Price Index data for February, which will be published on Friday.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.