The euro fell sharply against its major rivals on Thursday, as the European Central Bank President Mario Draghi said that the bank would start purchasing asset-backed securities soon, and signaled willingness to use additional unconventional instruments to address risks of low inflation.
Along with the series of targeted longer-term refinancing operations, these asset purchases will have a sizeable impact on bank’s balance sheet, which is expected to move towards the dimensions it had at the beginning of 2012, the ECB chief said in the press conference at Frankfurt.
The risks surrounding the economic outlook for the euro area continue to be on the downside, Draghi noted.
The risks to the Eurozone’s economic growth include heightened geopolitical risks and insufficient progress in structural reforms in euro area countries, he added.
The central bank left the deposit rate unchanged at -0.20 percent and the marginal lending rate at 0.30 percent. The decision was in line with economists’ expectations.
The euro hit 1.2396 against the greenback, its lowest since September 2012. On the downside, the euro may test support around the 1.23 zone.
Pulling away from an early 2-day high of 1.2057 against the franc, the euro hit a 2-year low of 1.2030. The euro is likely to find support around the 1.20 region.
The euro reversed from an early session’s high of 0.7863 against the pound, falling to a 3-day low of 0.7798. If the euro-pound pair continues its slide, 0.77 may be eyed as its next support level.
Having advanced to an 11-month high of 144.21 against the yen at 10:30 pm ET, the euro moved down to 142.46. Continuation of the euro’s slide may take it to a support around the 142.00 mark.
Retreating from early multi-week highs of 1.6272 against the kiwi and 1.4591 against the aussie, the euro eased to 1.6061 and 1.4428, respectively. The euro is likely to challenge support around 1.435 against the aussie and 1.60 against the kiwi.
The euro declined to a 3-day low of 1.4161 against the loonie, off an early high of 1.4297. Next key support for the euro is seen around the 1.41 area.
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