Euro Sinks As ECB Chief Draghi Hints At Further Easing

The euro re-entered the negative territory in European trading on Thursday, after the European Central Bank chief Mario Draghi hinted that the bank would "review and possibly reconsider" its monetary policy stance at its next meeting in early March, as downside risks to inflation had intensified amid global market turmoil and plunging commodity prices.

In his customary press conference at Frankfurt, Draghi signaled that euro area inflation dynamics continue to be weaker than expected, as downside risks had risen further amid heightened uncertainty about emerging market economies' growth prospects, volatility in financial and commodity markets, and geopolitical risks.

"It is therefore necessary to review and possibly reconsider our monetary policy stance at our next meeting in early March, when the new staff macroeconomic projections become available which will also cover the year 2018," he told.

His comments came after the ECB left its interest rates unchanged. The main refinancing rate was maintained at a record low of 0.05 percent, the deposit rate was kept at a record low of -0.30 percent and the marginal lending rate was retained at 0.30 percent.

The euro showed mixed performance in the Asian session. While the currency declined against the greenback and the pound, it held steady against the franc and the yen.

The euro resumed its early decline against the greenback, touching a 2-week low of 1.0778. This is down by 0.96 percent from Wednesday's closing value of 1.0883. The euro-greenback pair is likely to find support around the 1.06 region.

The single currency slipped to a 2-day low of 0.7640 against the pound and more than a 9-month low of 126.16 against the yen, reversing from its prior highs of 0.7742 and 127.87, respectively. Continuation of the euro's downtrend may lead it to support levels of around 0.75 against the pound and 124.00 against the yen.

Pulling away from an early high of 1.0973 against the Swiss franc, the euro edged down to 1.0918. Further weakness may take the euro to a support around the 1.08 mark.

Figures from the Swiss National Bank showed that Switzerland's money supply growth slowed in December, after improving in the previous two months.

M3, the broad measure of money supply, rose at a slower pace of 1.6 percent year-over-year in December, following a 2.1 percent spike in November. In October, the rate of increase was 1.4 percent.

The euro weakened to a 2-day low of 1.6722 against the kiwi, 6-day low of 1.5554 against the aussie and an 8-day low of 1.5522 against the loonie, after having advanced to 1.7010, 1.5881 and 1.5876, respectively in early deals. The euro is seen finding support around 1.65 against the kiwi, 1.54 against the aussie and 1.53 against the loonie.

Looking ahead, weekly U.S. crude oil inventories data and Eurozone consumer confidence index for January are due to be released shortly.

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