The euro spiked higher against its major opponents in the European session on Thursday, after the European Central Bank President Christine Lagarde said that the bank doesn’t target the exchange rate but would watch currency movements that could impact inflation.
The ECB discussed the recent appreciation of the euro, but the bank’s mandate is price stability, Lagarde said in a news conference in Frankfurt.
Incoming data suggested a strong rebound in activity broadly in line with previous expectations, although the level of activity remains well below the levels prevailing before the coronavirus pandemic, Lagarde told.
The monetary policy measures that have been implemented since early March are providing crucial support to underpin the recovery of the euro area economy and to safeguard medium-term price stability.
The ECB lifted its forecast for real GDP growth in 2020 to -8.0 percent from a fall of 8.7 percent estimated in June.
The Governing Council maintained the main refi rate at a record low of zero percent and the deposit rate at -0.50 percent. The marginal lending facility rate is at 0.25 percent. The decision was in line with expectations.
“The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics,” the bank said.
The Governing Council retained the pandemic emergency purchase programme at EUR 1.35 trillion.
Net asset purchases under the PEPP will be conducted until at least the end of June 2021 and, in any case, until the Governing Council judges that the coronavirus crisis phase is over.
The currency was higher against its major counterparts in the Asian session, except the franc.
The euro appreciated 0.8 percent against the greenback, approaching an 8-day high of 1.1895. The pair had closed Wednesday’s deals at 1.1803. Next immediate resistance for the euro is likely seen around the 1.20 level.
Data from the Labor Department showed that first-time claims for U.S. unemployment benefits came in unchanged in the week ended September 5.
The report said initial jobless claims came in at 884,000, unchanged from the previous week’s revised level. Economists had expected jobless claims to drop to 846,000 from the 881,000 originally reported for the previous week.
The euro added 0.8 percent to an 8-day high of 126.28 against the yen, after falling to 125.26 at 5:00 pm ET. The EUR/JPY pair was worth 125.32 when it ended deals on Wednesday. The euro is likely to challenge resistance around the 127.5 region, if it gains again.
Data from the Cabinet Office showed that Japan core machine orders gained a seasonally adjusted 6.3 percent on month in July – coming in at 751.3 billion yen.
That beat expectations for an increase of 1.9 percent following the 7.6 percent decline in June.
The euro bounced off to 1.0787 against the franc, up by 0.3 percent from a 10-day low of 1.0750 seen at 5:15 am ET. At Wednesday’s close, the pair was valued at 1.0769. Should the euro strengthens further, it is likely to test resistance around the 1.10 region.
Extending early rally, the euro gained 1.1 percent to a 5-1/2-month high of 0.9179 against the pound. The EUR/GBP pair had finished yesterday’s trading session at 0.9076. The euro is seen finding resistance around the 0.93 mark.
Survey data from the Royal Institution of Chartered Surveyors showed that UK house prices increased at the strongest pace since 2016 as almost all regions logged price increases.
The house price balance rose to +44 percent in August, the highest reading since 2016, from +13 percent registered in July. The expected balance was +25 percent.
The euro strengthened to 1.6314 against the aussie, from a session’s low of 1.6197 seen at 5:00 pm ET. The euro-aussie pair was worth 1.6197 at Wednesday’s close. Extension of the euro’s uptrend may lead it to a resistance around the 1.66 region.
Having declined to a 2-day low of 1.7652 at 5:30 pm ET, the euro recovered to 1.7755 against the kiwi. At yesterday’s trading close, the pair was quoted at 1.7658. The euro may locate resistance around the 1.82 mark.
Following a 2-day drop to 1.5509 at 5:00 pm ET, the euro turned higher against the loonie, with the pair trading at 1.5569. The euro was trading at 1.5515 a loonie at yesterday’s close. Further rally may take the euro to a resistance around the 1.58 area.
The material has been provided by InstaForex Company – www.instaforex.com