The single currency rallied to a fresh three-year high of $1.2536 as Draghi delivered an upbeat assessment of the euro zone economy and refrained from retaliating against comments by top US government officials welcoming a weaker dollar.
'Obviously a weaker dollar is good for us as it relates to trade and opportunities'.
The British pound increased 0.6 percent to $1.4328, the strongest in 19 months. Annual inflation rate was seen rising at a pace of 1.6% compared to 1.9% previously.
The ECB kept its ultra-easy monetary policy unchanged.
He could also signal that work has begun on revising the ECB's policy guidance, which would cut a singular focus on asset buys and instead focus its efforts more broadly to include all policy instruments, particularly interest rates. The advance came after the weekly EIA inventory data showed a drawdown in U.S. crude stockpiles for the tenth straight week.
Still, many market players expect the BOJ to wait several months, and possibly many more, before tightening its policy, given the country's inflation is nowhere near its two-percent target. The business and consumer confidence have been at the highest level for more than a decade.
While most FX traders will be watching to see what the European Central Bank decision does to extend the EUR/USD or EUR/JPY rallies, decide a trend for EUR/GBP, or revive the waylaid moves like EUR/AUD's; we should remember what monetary policy means in the grander scheme of things. Commerce Secretary Wilbur Ross suggested at Davos that the US could enact more levies.
"EUR/USD trading above 1.23 ahead of the European Central Bank event does feel a bit "long in the tooth" (for now), but we would see any move lower as a technical correction - rather than a new trend".
USD/JPY at 109.13 is trading below support at 109.5.
- At the time of the webinar, GBP/USD remained quite elevated beyond any recent support swings, with the most recent taking place below the 1.4000 psychological level. On the 4-hour chart, resistance could be seen forming near 110.44 - 110.34 region that was recently breached.
However, if United Kingdom growth disappoints and US growth beats expectations, GBP/USD could potentially rebound from its recent highs, particularly with many analysts still calling the US Dollar oversold.
NZDUSD (0.7380): The New Zealand dollar fell after the release of the quarterly CPI data.
China doesn't seem to want the yuan to be all that much stronger than 6.4 yuan to the dollar-though there isn't (yet) hard evidence of intervention, and the yuan did move a bit beyond 6.4 today.
"This suggests the European Central Bank won't be overly concerned about the EUR's current trade-weighted level and there is little it can do about broader Dollars weakness outside of the very short-term knee-jerk response". We have another test above.8000 taking place now, and I showed how a pin bar formation can open the door for a reversal setup, very similar to what we had looked at in early-September of past year on the pair.
I wrote this article myself, and it expresses my own opinions.