The euro surged to the highest level since January 2015 against the U.S. dollar on Friday, by 1.03 percent to end at $1.19188 amid little mention about the single currency’s strength as had been expected by European Central Bank President Mario Draghi.
Speaking at the U.S. Federal Reserve’s annual conference in Jackson Hole, Wyoming, Draghi defended free trade and post-crisis financial regulation, while avoiding any comments on monetary-policy deliberates or the euro exchange rate, which was considered as a problem that he spoke out previously.
“Openness to trade is under threat, and this means that policies aimed at answering this backlash are a vital part of the policy mix for dynamic growth,” Draghi said in the published text of his speech at the event in Wyoming on Friday. “A turn towards protectionism would pose a serious risk for continued productivity growth and potential growth in the global economy.”
It is the fact that the euro has extended its gains to a fairly high level, and some investors had hoped Draghi would try to talk down the euro as the strong currency would undermine the euro-area economic recovery, reflected by losing strength in exports.
The euro gained significantly with euro-area’s recovery since early this year. Germany is a key driver in this upturn as it accounts for around 30 percent of euro-area output. A breakdown of gross domestic product, which is set to be 0.6 percent growth published Friday, revealed consumers and the government drove the expansion last quarter. Exports rose slightly, though imports climbed faster and made net trade a drag on growth.
The nation’s uncertainties currently are from domestic factors, such as its automaker scandal and next month’s elections, and the outlook may be positive to future economy. However, Ifo’s measure of current economic condition eased back from a record high in August showed slide in investor confidence in the nation.
The EUR/USD retreated slightly by 0.17 percent to $1.19224 as of 12:20 p.m. in Sydney. Technically with a sign of rising Relative Strength Index (RSI) of 65.9531, the USD/CAD is still consolidating in a daily developing ascending channel.
From the daily chart of EUR/USD, we can see that it already broke to Jun 6’s low of 1.18760 in 2010, showing that further rise would occur if it will not retreat in the following few days.
Chart 1: EURUSD Daily
Thank you for inquiry ACY.
Your application has been received, and we will arrange an account manager within 24 hours to contact you! We wish you have pleasant trading experience!