Forex - EUR/USD hits fresh 4-month lows after Draghi

The euro fell to four-month lows against the dollar on Thursday after European Central Bank President Mario Draghi said monetary policy will remain accommodative for as long as is needed.

EUR/USD hit 1.2747 during European afternoon trade, the pair’s lowest since November 21; the pair subsequently consolidated at 1.2788, shedding 0.46%.

The pair was likely to find support at 1.2689, the low of November 16 and resistance at 1.2852, the session high.

The euro weakened broadly after Draghi said the bank would closely monitor economic and monetary developments and assess any impact on the inflation outlook. 

Draghi also said the bank would closely monitor financial market conditions and their potential impact on monetary policy.

The economic outlook for the euro zone remains weak, but a gradual recovery should take hold in the second half of the year, subject to “downside risks” Draghi said.

The ECB left interest rates on hold at 0.75% in a widely expected decision earlier Thursday.

Draghi said the bailout for Cyprus was not a template and added that it was “not smart” to propose a levy on deposits of less than EUR100,000 held in Cypriot banks.

The euro fell to session lows against the pound, with EUR/GBP down 0.34% to 0.8462.

The Bank of England left interest rates on hold at 0.5% and the size of its asset purchase program unchanged at GBP375 million on Thursday, in a widely expected decision.

The decision came on the heels of data showing that the U.K. service sector expanded at the fastest pace in seven months in March, fuelling hopes that the economy will narrowly avoid a triple-dip recession.

Elsewhere, the euro was sharply higher against the yen, with EUR/JPYjumping 0.2.31% to 122.34.

The yen fell across the board on Thursday after the Bank of Japan implemented aggressive easing measures aimed at spurring growth and combating deflation in the world’s third largest economy.

The BoJ, under the leadership of newly appointed Governor Haruhiko Kuroda, said it plans to double its asset purchase program over the next two years and extend the maturities of the bonds it purchases.

In the U.S., the Department of Labor said the number of people who filed for unemployment assistance in the U.S. last week rose by 28,000 to a seasonally adjusted 385,000, compared to expectations for an decrease of 7,000 to 350,000.

Jobless claims for the preceding week rose by an unrevised 357,000.

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