Forexpros – The euro pared losses against the U.S. dollar on Thursday, but gains were limited after downbeat comments by European Central Bank President Mario Draghi and amid ongoing uncertainty over political instability in Greece.
EUR/USD pulled back from 1.3657, the daily low to hit 1.3755 during U.S. morning trade, up 0.06%.
The pair was likely to find support at 1.3607, the low of November 1 and resistance at 1.3816, the high of October 18.
The single currency remained supported as Greece’s controversial referendum on the country’s bailout program was likely to be canceled due to a potential government collapse.
Several ministers said earlier that they did not support Greek Prime Minister George Papandreou’s referendum plan, fueling speculation that he would lose Friday’s confidence vote.
Earlier in the day, the ECB lowered its interest rate to 1.25% from 1.50% as the region’s escalating debt crisis overshadowed concerns over persistently high inflation.
Speaking at the bank’s post policy meeting press conference, new president Mario Draghi said that “inflation has remained elevated” and is likely to remain above 2% for “some months to come”, but is expected to fall below that threshold during 2012.
Mr. Draghi said ongoing tensions in financial markets could slow the pace of growth in the euro zone and said the region’s economy continued to be “subject to particularly high uncertainty and intensified downside risks.”
“What we are observing now is … slow growth heading towards a mild recession by year end,” he said.
In the U.S., the Institute of Supply Management said earlier that its non-manufacturing purchasing managers’ index fell unexpectedly in October, ticking down to 52.9 after a reading at 53.0 the previous month.
Analysts had expected the index to rise to 53.7 in October.
In a separate report, the U.S. Department of Labor said that initial jobless claims rose less-than-expected last week.
Elsewhere, the euro was down against the pound with EUR/GBP shedding 0.21%, to hit 0.8603.
Also Thursday, leaders from the G-20 group of nations were meeting in Cannes to discuss a range of issues, including the implications of a Greek default or possible euro zone exit.
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