Forexpros – The euro traded down against the U.S. dollar Thursday, after European Central Bank President Mario Draghi gave no clear hints as to the ECB’s plans to manage the debt crisis
EUR/USD pulled back from a session high of 1.2404, the pair’s highest since July 5, to hit 1.2153during U.S. afternoon trade, falling 0.60%.
The pair was likely to find support at 1.2116, the low of July 26 and resistance at 1.2335, Wednesday’s high.
Depressing the single currency, Draghi stated the bank may undertake bond purchases in order to bring down the “exceptionally high” borrowing costs of stressed euro zone members, but provided no explicit details on how and when these activities may be carried out.
Draghi also said that any such action by the ECB was conditional on euro zone governments experiencing difficulty on bond markets activating the bloc’s bailout funds to purchase government bonds and accepting strict conditions and supervision.
The statement disappointed market expectations for bold steps to counter the debt crisis, which have been building since Draghi pledged last week to do whatever is necessary to preserve the euro.
The ECB left interest rates unchanged at a record low 0.75% earlier.
The euro had rallied against the greenback ahead of the press conference, buoyed by expectations for a decisive policy response by the central bank and after a successful Spanish bond auction.
Earlier Thursday, Spain auctioned EUR3.13 billion of government bonds, the top end of the targeted range, but borrowing costs were higher while demand was weaker.
Spain’s Treasury sold EUR1.05 billion of 10-year bonds at an average yield of 6.64%, slightly up from 6.43% last month.
Following the auction, the yield on Spanish 10-year bonds hit an intra-day low of 6.63%, before climbing back above 7% as markets digested Draghi’s remarks.
The euro turned lower against the pound and the yen, with EUR/GBP giving back % to trade at 0.7854 and EUR/JPY down sharply 0.86% to 95.06.
In the U.S., the Department of Labor said the number of people who filed for unemployment assistance last week rose to a seasonally adjusted 365,000, from an upwardly revised 357,000 in the preceding week.
Analysts had expected initial jobless claims to rise to 370,000 last week.
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