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Greenback Regains Poise As ECB-Induced EUR Spike Meets Tough Resistance

FOREX
  • The ECB’s Governing Council made the decision to slow its net asset purchases at a marginally quicker pace than they had previously assessed. This prompted a substantial wave of single currency demand, which saw EURUSD rip from around 1.1040 to highs of 1.1121 prior to President Lagarde addressing the press.
  • Matching perfectly with the January 28 low and breakdown point, the pair met firm touted resistance as markets awaited further details within the press conference.
  • As the session developed markets began to analyse the ECB’s choice of language around rate hikes. Market participants interpreted the phrase "some time after the end of the net purchases and will be gradual", as a dovish balancing act, with Lagarde confirming this provides the ECB with optionality amid the obvious lingering uncertainties.
  • Indeed, the Euro began to gradually unwind the notable spike and eventually made fresh session lows, with EURUSD extending back below 1.10 and hovering just above session lows of 1.0980 as of writing and the likes of EURAUD, EURCAD and EURNZD all down well over 1%.
  • Given EURUSD’s path of least resistance throughout the second half of Thursday, the USD index sits 0.55% higher, erasing around half of yesterday’s losses.
  • Growth data from the UK is the highlight of Friday’s European data calendar before Canadian February employment and US Michigan sentiment data round off the week.
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