EUR/USD has posted strong gains in Thursday trading. In the North American session, EUR/USD is trading at 1.1903, up 0.84% on the day.
Guarded optimism from ECB
ECB policymakers held their monthly policy meeting earlier on Thursday, and investors were buying what the ECB was selling, as EUR/USD has jumped close to one percent and punched above the 1.19 level. The ECB sounded cautiously optimistic, noting that domestic demand was fueling a recovery in the eurzone, while at the same time acknowledging that the economic uncertainty was weighing on consumer spending and on business investment.
There were two issues that the markets were focused on ahead of the meeting, deflation concerns and the sharp appreciation in the value of the euro. ECB President Christine Lagarde touched on both issues in her press conference. With regard to deflation, Lagarde said that deflation pressures had eased since June and that the weak inflation levels could be attributed to low energy prices. As for the high value of the euro, Lagarde said that there was no need for the markets to overreact to the currency’s gains. This stance seems to signal that the ECB doesn’t plan to take steps to curb the euro’s ascent, and the markets saw this as a green light to go ahead and buy more euros on Thursday.
After a quiet Asian session, EUR/USD posted strong gains in European trade. The pair is steady in North American trade
- EUR/USD easily broke through resistance lines at 1.1841 and 1.1878 in the European session. The next resistance line is at 1.1922. Above, resistance at 1.1978 is protecting the symbolic 1.20 level
- There is support for the pair at 1.1760 and 1.1716
- EUR/USD has broken above the 10-day MA, which points to an uptrend