Euro Falls Amid ECB Draghi's Comments

The euro weakened against most major currencies in the European session on Friday amid European Central Bank President Mario Draghi's speech that the firm anchoring of inflation expectations is critical under any circumstances.

Speaking at the Frankfurt European Banking Congress, Draghi said that the inflation situation in the euro area has also become increasingly challenging. He observed the risk of too prolonged period of low inflation becoming embedded in inflation expectations.

The Governing Council has communicated its expectation that the combination of all the monetary policy measures it has decided on will expand the Euro system's balance sheet towards the levels prevailing in early 2012, Draghi said.

The addition of purchases of covered bonds to ABS purchases will allow the ECB to conduct interventions that will achieve the intended effects, he added.

"If on its current trajectory our policy is not effective enough to achieve this, or further risks to the inflation outlook materialize, we would step up the pressure and broaden even more the channels through which we intervene, by altering accordingly the size, pace and composition of our purchases," he said.

In the Asian session, the Euro held steady against most major currencies.

In the European trading, the euro fell to 3-day lows of 0.7970 against the pound, 1.2471 against the U.S. dollar and 1.4104 against the Canadian dollar, from early highs of 0.8001, 1.2567 and 1.4203, respectively. If the euro extends its downtrend, it is likely to find support around 0.792 against the pound, 1.23 against the greenback and 1.40 against the loonie.

Against the yen, the Australia and NZ dollars, the euro slipped to 2-day lows of 147.08, 1.4484 and 1.5868 from early highs of 148.42, 1.4555 and 1.5962, respectively. The euro is likely to find support around 144.80 against the yen, 1.43 against the aussie and 1.56 against the kiwi.

Looking ahead, Canada consumer price index for October is due to be released in the New York session.

At 2:45 pm ET, Bank of England External MPC Member David Miles will deliver a speech at the Festival of Economics, in Bristol.

Euro vs US Dollar (FX:EURUSD)
Forex Chart
From Mar 2024 to Apr 2024