- Mario Draghi, ECB President
An equilibrium point is a market price, where suppliers and consumers meet at a particular quantity and price at which they are both satisfied. A couple of years ago the equilibrium point for EUR/USD was a level of 1.30. Last year some of the economists were expressing their views a new point will stand around 1.35. By using several approaches back in 2002 Deutsche Bank said the appropriate exchange rate for EUR/USD is 1.20, while the OECD made a long-term projection around 1.09.
On the back of positive outlook from the ECB and diminished deflation concerns the most traded currency pair soared to 1.3872, moving to the highest level in two years. This level was last seen in October 2011 and the next stop will be located only at 1.3893. The GDP, unemployment and inflation outlooks are all sending welcoming signs for a slow, but steady recovery. This time Draghi was well-prepared to face a barrage of questions regarding the inflation outlook. While Mark Carney most of the time fails to assure markets in central bank's future moves, the ECB's President sounded very convincing.
Immediately after the press conference all traders that were expecting a rate cut were in retreat, however, with the Euro above 1.38 the recovery can be under threat. And the question now is for how long the ECB will remain in a "wait-and-see" mode?
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