For the 24 hours to 23:00 GMT, EUR rose 0.95% against the USD and closed at 1.3863, as investors speculated that easing measure in the Euro-zone economy would not be implemented after the ECB President, Mario Draghi rubbished deflation threats and instead sounded confident of achieving the inflation target by the end of 2016. Risk-appetite among traders received a further boost after the ECB Chief played down concerns on the effect of Ukraine crisis on the Euro-zone economy and declared the region an “island of stability.” Mario Draghi’s comments came after the central bank decided to keep its interest rate unchanged at a record-low 0.25% and upgraded its 2014 growth-outlook to 1.2% from growth-previous estimate of 1.1%, adding that it sees economy to register a growth of 1.5% and 1.8% in 2015 and 2016 respectively.
Data from the Euro-zone’s member nations showed that, on a seasonally adjusted basis, factory orders in Germany advanced 1.2% (MoM) in January, surpassing analysts’ expectations for a rise of 0.7% and compared to a 0.2% drop witnessed in the previous month. Separately, ILO unemployment in France fell to 10.2% in the fourth quarter, from a revised reading of 10.3% recorded in the preceding quarter.
Meanwhile, in the US, three of the top Fed officials expressed optimism on the growth of the US economy and backed the central bank’s decision to continue its tapering plans. The Fed Atlanta President, Dennis Lockhart urged the US Fed to keep paring its stimulus package even if the economy sees a slackness in its jobs markets. Furthermore, he blamed bad weather for the recent weakness in the US economic data and opined that the economy would return to a 3.0% annual growth later this year. Separately, the Chief of Philadelphia Fed, Charles Plosser, highlighted the importance for the central bank to accelerate its measured pace of reducing its QE measures amid a strong improvement in the economy. Meanwhile, William Dudley, President of the New York Fed, hinted the possibility for the US Fed to reconsider its guidance on short-term interest rates given that the nation’s jobless rate has now neared its 6.5% threshold. He further reiterated that the threshold for altering the tapering pace of the central bank’s stimulus package remains very high.
On the economic front, factory order in the US fell more-than-expected 0.7% (MoM) in January while weekly jobless claims came lower than market estimates for the week ended 28 February.
In the Asian session, at GMT0400, the pair is trading at 1.3858, with the EUR trading marginally lower from yesterday’s close.
The pair is expected to find support at 1.3761, and a fall through could take it to the next support level of 1.3663. The pair is expected to find its first resistance at 1.3915, and a rise through could take it to the next resistance level of 1.3971.
Market participants are expected to keep a tab on Germany’s industrial production data and France’s trade balance data, slated for release later today.