The euro fell down against the greenback after the comments by the ECB’s President Mario Draghi. He suggested that the ECB may cut rates, extend fixed-rate allotment, or inject more liquidity. The European Central Bank (ECB) President Mario Draghi in a speech in Amsterdam on April 25th stated that the Euro foreign exchange rate is increasingly important for policy and that the rising euro echoes the arrival of confidence.
In his statement, he said that even though the exchange rate is not targeted for policy making, a rise in the exchange rate with all else being equal denotes a monetary tightening that will have a downward impact on inflation and potentially a threat to the ongoing recovery.
Euro Foreign Exchange Rate:
Draghi said that although inflation will linger at low level for an extended period, it is expected to slowly mount back to 2 %. The delay is mainly attributed to the damages in the transmission mechanism that lengthen the lag between the accommodative policy stance and price developments.
The ECB has been fighting against the low-inflation and the slow-rise higher in the euro that has augmented the expectation for ECB stimulus. This will evaluate on the euro erstwhile in the future.
EURUSD Daily Chart Chart from EUR/USD Technical Analysis
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