What is Mario Draghi’s stance on policy adjustment? How does the EURUSD pair now trade? Gain insight on this matters on the ECB Draghi Policy Adjustment EURUSD Outlook.
14 March, HotForex – Draghi: Policy adjustments have to be measured and predictable. The central bank president said that adjustments will
“proceed at a measured pace that is most appropriate for inflation convergence to consolidate, taking into account continued uncertainty about the size of the output gap and the responsiveness of wages to slack”.
He added that the ECB currently sees
“inflation converging towards our aim over the medium term, and we are more confident than in the past that this convergence will come to pass”.
ECB’s Inflation Aim
At the same time, Draghi stressed that the central bank will “need to see further evidence that inflation dynamics are moving in the right direction” and that the condition to bring net asset purchases to an end is a “sustained adjustment in the path of inflation towards” the central bank’s inflation aim.
“Developments in foreign exchange markets and wider financial markets” as well as risks from the global environment “and in particular the possible spillovers of the new trade measures announced by the U.S. administration” are the main risk factors.
So while the ECB signaled a slow move towards an end to net asset purchases with the change in guidance last week, Draghi is already introducing caveats designed to price in a move too quickly.
ECB Draghi Policy Adjustment EURUSD Outlook
EURUSD which had earlier rejected 1.2400 rolled down through the Daily pivot to touch 1.2360 as the Euro weakened and the dollar caught a bid. Next support is the 1.2330-20 zone from yesterday with initial resistance at 1.2375-80.
This article about ECB Draghi Policy Adjustment EURUSD Outlook was written by Stuart Cowell, Market Analyst at HotForex. The provided article is a general marketing communication for information purposes only. It does not constitute an independent investment research. Nothing in this communication contains an investment advice or an investment recommendation. It also does not contain a solicitation for the purpose of buying or selling of any financial instrument.
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