As markets expected, the European Central Bank left its monetary policy unchanged at its January meeting on Thursday. Following the policy meeting, the ECB President Mario Draghi said the Euro zone's economic recovery remained subdued. Moreover, the ECB President stated at the post-meeting press conference that the region's economic growth is unlikely to gain momentum in the upcoming months due to the slow pace of structural reforms. According to Draghi, fiscal policies should also support the Euro zone's economic recovery within the European Commission's system of rules. The headline inflation rate is expected to rise more in the short-term, driven by higher energy prices. In the meantime, the Central bank said that underlying inflationary pressures in the region remained benign. However, the ECB expressed hopes for an increase in core inflation over the medium term. The EUR/USD pair hit its daily low of $1.0607, following Draghi's comments on inflation. The Central bank pointed to an uptick in manufacturing activity and rising confidence indicators. Nevertheless, it signaled it was ready to provide additional monetary stimulus if economic conditions worsen.
Back in December, the Bank cut its monthly asset purchases to 60 billion euros but extended the QE program by six months until at least March 2017.
Upcoming events: European fundamentals
At 11:30 on Monday ECB President Mario Draghi is set to give a speech regarding European common currency's monetary policy. That is the only notable event set to occur on Monday. However, on Tuesday morning the services and manufacturing PMI's off all of the Eurozone countries are set to be published from 8:00 GMT until 9:00 GMT.
EUR/USD surges to 1.0750 mark
Daily Chart: On early Monday morning the common European currency surged against the US Dollar, as the currency exchange rate reached the newly calculated first weekly resistance level at 1.0752. However, the pair was stopped by the resistance, which it is most likely to continue to attempt to break through. It is possible that the weekly R1 will be broken, and in such case the rate is set to jump to the 1.08 mark. Although, in case of a bounce off, the pair would fall as low as 1.0666, where the newly calculated pivot point is located at.SWFX traders remain firmly bullish
SWFX traders continue to short the Euro, as 53% of trader open positions are short. In addition, 61% of trader set up orders were to sell the Euro.
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.06 in April
Traders, who were questioned on their longer-term views on EUR/USD between December 23 and January 23 expect, on average, the currency pair to trade around 1.06 by the middle of April. In general, 56% of participants believe the exchange rate will be generally below 1.06 in ninety days and 27% see it below 1.02. In the meantime, 17% of those surveyed reckon the pair will trade above 1.12 in three months.