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EUR/USD Pair Settles Session Lower After Draghi's Comments

By ForexDec 06, 2012 03:09PM GMT Add a Comment
The pair settled the session lower as markets reacted to comments from Draghi who said that negative interest rates on deposit facility were discussed. Consequently, Euribor strip turned bid as markets re-priced chances of negative deposit rates in the future and the EONIA 6th FWD rate fell into negative territory.

The ECB's Draghi also said that inflation is expected to fall below 2% in course of 2013. Which given the central bank's price stability mandate should in turn should allow the ECB to ease policy further should the council decide that economic conditions warrant such a move. In terms of technical levels, supports are seen at the 10DMA line at 1.3001, followed by 1.2973 and then at 1.2939. On the other hand, resistance levels are seen at 1.3127/40 and then at 1.3150.

The pair settled the session near the unchanged mark, as risk averse flows following the press conference by Draghi where the head of the central bank hinted on negative rates in the futures supported the pair. Broad based EUR weakness weighed on GBP related cross, which settled with a loss of around 40 pips. In terms of technical levels, supports are seen at the 55DMA line at 1.6045 and then at the 21DMA line at 1.5974. On the other hand, resistance levels are seen at 1.6133/76 and then at 1.6200.

In spite of growing expectations that the LDP party will win elections which are to be held on December-16th, the pair settled lower after a surge into safe-haven related assets following the downbeat press conference by ECB’s Draghi weighed on the pair. In terms of technical levels, supports are seen at 82.21/00 and then at 81.72. On the other hand, resistance levels are seen at 82.75/84 and then at 82.94.
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