ECB's Draghi says global forces are holding down inflation

Mario Draghi held a speech this morning at the Deutsche Bundesbank's Marjolin Lecture, in Frankfurt. He said that he sees no reason for permanently lower inflation and that specific Eurozone challenges don't justify inaction. He also added that mon pol can not be relaxed about aeries of supply shocks.

According to Draghi ECB will not surrender to low inflation, but he said that no doubt that if ECB needed to adopt a more expansionary policy the risk of side effects would not stand in their way. However, he emphasized that there are risks of acting too late outweigh risks of acting too early.

Euro is currently being traded around 1.1150 area. Pair is likely to find support around 1.1050 handle and resistance above 1.12 level. Later today, in the US session, Unemployment Claims figures are scheduled for a release.

EUR/USD Daily Forecast – 04 February

From Eurozone, yesterday, Spanish and Italian Services PMI data was published. The headline seasonally adjusted Spanish Services PMI posted 54.6 in January, in line with market forecasts, remaining well above the 50.0 no-change mark and thereby signalling a further sharp rise in activity during the month. Services output has now increased in each of the past 27 months, although the rate of expansion slowed again at the start of the year and was the weakest since December 2014. At 53.6 in January, down from December’s 69month high of 55.3, the headline Italian Markit/ADACI Business Activity Index showed a solid but slower rise in service sector output at the start of 2016. Analysts were expecting smaller decrease to 54.2. Growth in business activity has now been recorded for 11 months in a row. 

EUR/USD Daily Forecast – 04 February

Despite mixed US figures and major data releases from Eurozone, yesterday, Euro was pushed strongly up, all the way to above 1.11 handle, thus breaking above long standing consolidation range which is of course quite bullish sign and pair could be now heading towards 1.12 handle and even higher. Pair is likely to find support around 1.1050 handle, which was resistance for so long now, and resistance near 1.12 area, break above which would mark serious uptrend, so this is where we would place short-term buying and selling bids. Read more...

Spanish and Italian Services PMI declined in January