Forexpros – The euro turned lower against the U.S. dollar on Thursday, after European Central Bank President Mario Draghi quashed expectations for increased purchases of euro zone bonds and ruled out the possibility of lending to the International Monetary Fund.
EUR/USD hit 1.3313 during early U.S. trade, the pair’s lowest since November 30; the pair subsequently consolidated at 1.3334, shedding 0.58%.
The pair was likely to find support at 1.3258, the low of November 30 and resistance at 1.3458, the session high.
The euro’s losses came after Draghi said the ECB could not circumvent a treaty which prevents it from giving monetary financing to governments, saying that it was “legally complex” for euro zone central banks to lend to the International Monetary Fund.
Draghi also stopped short of giving any commitment to increased purchases of government bonds, saying the bank’s bond purchasing program was “neither eternal nor infinite”.
The ECB did unveil new measures to increase liquidity, including unlimited 36-month credit for euro zone banks, the easing of collateral requirements for ECB loans and a reduction in the reserve requirement for commercial lenders.
The announcement came after the ECB cut its benchmark interest rate by 0.25%, bringing rates to a record low of 1%.
Meanwhile, investors remained cautious amid uncertainty over the outcome of a critical two-day European Union summit aimed at reaching a breakthrough on an agreement to arrest the spread of the debt crisis in the euro zone.
European leaders were to discuss proposed changes to EU treaties which would allow for greater fiscal integration and stricter enforcement of budgetary discipline in the single currency bloc.
The euro was also lower against the pound, with EUR/GBP dipping 0.04% to hit 0.8532.
In the U.S., the Department of Labor said earlier that jobless claims fell to a nine-month low last week, declining to 381,000 after a 404,000 increase the previous week.
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