EURUSD, 240 min
While the ECB President Draqhi is answering the questions here’s a quick update on his speech. According to Draqhi recovery is gaining momentum in the euro area and is supported by the solid domestic demand. While low oil prices benefit the consumers investment is edging up as favourable financing supports it together with corporate profits. GDP in 2016 is expected to come in at 1.6%, and in 2017 at 1.7% and inflation is expected to remain at low levels.
He commented that bank lending rates have fallen to historical lows while credit growth turned positive already in 2015. Bank shares have benefited from readily available financing and growing corporate profits but also SME’s are reporting easy access to credit.
More action is needed to boost Eurozone investment. Draqhi promised that further monetary easing is in the pipeline. At first markets didn’t react to this promise at all but at the time of writing EURUSD has started to edge lower. Draghi also sees the downside risks significant and spend considerable amount of time to justify the recent ECB actions.
The fact that the markets are waiting for the Fed Chair Yellen to speak at 2 pm GMT is likely to keep the participants from reacting strongly on what the ECB president is saying.
Major support and resistance levels in EURUSD are 1.1220, 1.1239 and 1.1300, 1.1350 and 1.1380.
Janne Muta
Chief Market Analyst
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