Draghi strengthens QE bets, send EUR lower – Growth Aces

FXStreet (Barcelona) - The Growth Aces Research Team notes that Draghi strengthened QE bets by commenting that the ECB was in preparations to adjust the QE measures to keep the inflation near its target, leading the EUR to make a fresh low at 1.2035.

Key Quotes

“European Central Bank President Mario Draghi said the risk of the central bank not fulfilling its mandate of preserving price stability was higher now than half a year ago, and reiterated its readiness to act early this year should it become necessary.”

“Euro zone inflation stands at 0.3%, far below the ECB's target of just under 2%. Draghi said: “We are in technical preparations to adjust the size, speed and compositions of our measures early 2015, should it become necessary to react to a too long period of low inflation. There is unanimity within the Governing Council on this.” He added that government bond purchases were among the tools the ECB could use to fulfill its mandate.”

“The EUR/USD fell to 1.2035 after Draghi strengthened expectations for quantitative easing in the Euro zone. That was the lowest level since June 2010.”

“We were looking for a correction in the EUR/USD. However, breaking below the level of 1.2100 fueled bearish sentiment.”

“Our strategy now is to sell EUR/USD at 1.2180. If our order is filled the target will be 1.1950 (just below daily low on June 6, 2010).”