EUR/USD – The euro drops after Draghi’s comments; U.S. GDP data release today – Analysis for April 27th 2018
As it was widely expected, the European Central Bank kept the rates unchanged yesterday. Mario Draghi’s speech during the press conference started a wide euro sell-off. At the same time the U.S. dollar is seen at the highest level in three and a half months. Support is set at 1.20, resistance at 1.21.
The common European currency has dropped by more than a hals percent against the dollar and broke through the 1.21 level. As it was expected, the weakening of the euro started after the post-meeting EBC press conference. EBC’s Mario Draghi said that the bloc’s economy remains strong despite signs of „moderation” seen in the latest results during last few feeks. Draghi added that „ample degree of monetary stimulus” remains necessary in the next few months. The euro has been sold off heavily and dropped to the lowest level since mid-January.
In the meantime the dollar is trading at a three and half month high against a basket of major currencies. The surge of the greenback became possible as the 10-year Treasury yields broke above the psychological barrier of three percent. The dollar was also supported as the last geopolitical tensions eased and the markets focused on data once again. We are expecting some important numbers to be released today: annualized GDP and personal consumption.
14:30 USA – Annualized GDP 1Q
14:30 USA – Personal consumption
16:00 USA – UoM sentiment
Pic.1. EUR/USD chart.
Mario Draghi’s speech at the post-meeting press conference started a euro sell-off and the EUR/USD pair dropped below the 1.21 level. U.S. readings will be the main factor driving the pair today. If the numbers come out strong, the greenback may find further support and the pair could move towards the 1.20 level.