EUR/USD (a 4-hour chart)
The euro fell after Draghi’s speech.
The European Central Bank decided to keep the base rate at 0.75%. At a press conference, President Draghi said the euro appreciation was a sign of the return of confidence, but the Bank will monitor the level of the currency and its impact on the inflation risks.
He also noted that the exchange rate is not a policy of the bank, as a goal, and as in real and nominal exchange rate is close to its long-run average. 10-year MA in EUR / USD is currently around 1.3450 level.
Draghi said that inflation is expected to fall below 2% in the coming months, and that the economic slowdown in the euro area will prevail during the early 2013, before gradually be restored later.
ECB President's comments sent the euro down, EUR/USD fell to 1.3370 from session highs - 1.3575. Despite the sharp correction down the pair continues to trade in a bullish trend (higher highs and higher lows), while support holds at 1.32.
Draghi sees eurozone recovery in the second half of the year.
ECB Governing Council decided to keep the key interest rate at 0.75% at the meeting of the monetary policy.
The President suggested that the inflation is expected to fall below 2% in the coming months, and said that inflationary pressures should remain within the target. He said that economic growth will remain weak in the "beginning" of 2013 and recover only very gradually, along with the improvement of the situation on the financial markets. The recovery will be maintained ECB accommodative monetary policies, improving external demand and ease financial market conditions.
When asked about the recent appreciation of the single currency and whether it may harm the recovery, said the head of the ECB, this may be an indication that the credibility of the euro has started to work. He added that the Central Bank will continue to closely monitor the development of the money market.
According to Richard Kelly, head of European rates and currency research at TD Securities: "Draghi seems to want his verbal influence manage the euro appreciated further, but do not particularly want to develop this theme. He would have been pleased to got stronger euro remained close to the current levels. At this time, the market is not obeyed ... "