Forex - EUR/USD rebounds from 4-month lows

The euro rebounded from four-month lows against the dollar on Thursday, erasing losses made during a dovish press conference by European Central Bank President Mario Draghi.

EUR/USD pulled back from 1.2747, the pair’s lowest since November 21, to hit 1.2869 during U.S. morning trade, rising 0.17%.

The pair was likely to find support at 1.2747, the session low and resistance at 1.2954, the high of March 21.

The euro dropped to session lows against the dollar after Draghi said the ECB was ready to act to cut rates if needed, adding that monetary policy will remain accommodative for as long as is needed.

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 on Thursday.

Draghi also 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 recovered after the ECB chief said the bank’s commitment to the single currency is largely underestimated.

Elsewhere, the euro was fractionally lower against the pound, withEUR/GBP dipping 0.06% to 0.8484 and extended its rally against the broadly weaker yen, with EUR/JPY advancing 3.25% to 123.39.

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.

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 last week rose by 28,000 to a seasonally adjusted 385,000, compared to expectations for a decrease of 7,000 to 350,000.

-->