The Euro has jumped to a one-year against the USD following some upbeat comments from ECB president, Mario Draghi.
Draghi said that he sees there being room to start normalising monetary policy by paring back their quantitative easing and increasing interest rates (in time). Other members of the ECB have made similar comments recently but these remarks were more positive than the market had expected from Draghi which increased the appeal of the Euro and pushed the EUR/USD through some key resistance levels, causing a technical rally.
Weakness in the USD also encouraged this breakout in the EUR/USD cross, as Fed Chairwoman Yellen gave a less optimistic tone in a speech last night. Voting in the new proposed US healthcare bill has also been delayed which supports the view that the new US government lacks the ability to approve new policy changes. This notion has been taken into account by the IMF, who cut US growth forecasts as they took Trump’s fiscal stimulus plans out of their equations, stating that they will struggle to hit his targets.
In other news, the Tory/DUP alliance has finally been agreed to much contention. Upon announcement Sterling temporarily firmed slightly but it was widely anticipated and quickly gave back any of these gains.
As a result of this, the EUR/USD has pushed up 2-cents from yesterday’s low. This dragged the GBP/EUR down 1 cent from yesterday’s high and it currently trades at the lowest levels since November last year (7-mth low!). The GBP/USD is up 1-cent from yesterday’s low and now trades close to a 3-week high.