Forexpros – The euro fell sharply against the yen on Thursday, after European Central Bank President Mario Draghi outruled the possibility of working with the International Monetary Fund on a rescue package and said the central bank could not give monetary financing to governments.
EUR/JPY hit 103.01 during European afternoon trade, the pair’s lowest since November 28; the pair subsequently consolidated at 103.16, tumbling 0.95%.
The pair was likely to find support at 102.48, the low of November 25 and a seven-week low and resistance at 104.21, the session high.
The euro came under heavy selling pressure after Draghi said the ECB could not circumvent a treaty which prevents it from giving monetary financing to governments.
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 to euro zone banks, a cut in the reserve requirement for commercial banks and the loosening of collateral requirements for ECB loans.
The announcement came after the ECB cut its benchmark interest rate by 0.25%, bringing rates to a record low 1%.
The euro was also lower against the U.S. dollar, with EUR/USD falling 0.61% to hit 1.3331.
Also Thursday, the U.S. Department of Labor said that jobless claims rose less-than-expected last week, climbing 381,000 after a 404,000 rise the previous week.
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