10, June 2013

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

The euro rose against the U.S. dollar on Thursday when the European Central Bank left its key interest rate unchanged and its president Mario Draghi made no hint that the central banke supports the idea of further monetary policy easing in the short term.

As it was expected, the central bank decided to leave the refinancing rate and the deposit rate unchanged.

The negative deposit rate could damage the euro, says Tatjana Michel, the currency analysis director at Charles Schwab. Euro was supported by the surplus from the current balance of payments, as well as from the ECB balance, which is reducing and not growing, both in the United States, she noted.

In his opening statement Draghi reiterated previous comments about how he sees the gradual economic recovery in the euro zone this year and that the ECB will keep policy accommodative as long as it is necessary.

Draghi said the ECB lowered its 2013 growth forecast for the euro area GDP to -0.6%, but raised its forecast for 2014 to 1.0%. Risks of an economic growth remain on the downside.

The ECB inflation forecast has been lowered to 1.4% since 2013, while the inflation forecast left unchanged at 1.3% in 2014. The growth potential and risks to inflation remain broadly balanced.