After Mario Draghi’s speech at the ECB presser the euro seemed destined to correct towards the 1.2200 figure as the ECB Chief made perfectly clear that there would be no quick taper or monetary tightening on ECB’s agenda.
But the pair has remained remarkably resilient holding bid underneath the 1.2300 figure and now looks destined to make another run at the 1.2500 level.
The pick up in the pair is due less to any intrinsic catalysts in the European Union, but rather due to dollar’s recent weakness. The firing of Secretary of State Rex Tillerson adding to the chaos in the White House, the muted inflation data and the very likely tepid results from tomorrow’s US Retail Sales have all cast a pall over the idea that Fed will continue unimpeded towards 75bp of hikes this year.
If the market begins to pare back US rate hike expectations further, the dollar selloff will intensify and EURUSD will push towards the swing highs at 1.2500