Forexpros – The euro slid against the greenback on Monday on European Central Bank President Mario Draghi’s weekend comments that monetary policy authorities won’t intervene to ease the European debt crisis.
EUR/USD hit 1.3030 in early Asian trading, down 0.10%, firming briefly after a session low of 1.3022 but well off a high of 1.3043
The pair was likely to find technical support at 1.3015 and resistance at 1.3057.
The euro strengthened against the greenback on Friday as global investors viewed it as an oversold currency despite ongoing uncertainty stemming from the debt crisis there.
However, over the weekend, European Central Bank President Mario Draghi reiterated his view that the bank does not plan to step in and prop up the financial system via quantitative easing, which are debt purchases from banks designed to ease borrowing costs and access to credit.
ECB officials have said such policies increase inflationary pressures, which goes against their mandate to control prices.
Furthermore, central bankers have said governments need to act to improve their economies and not fall back on monetary policy, which would give them wiggle room from pushing through unpopular austerity measures.
“The important thing is to restore the trust of the people – citizens as well as investors – in our continent. We won’t achieve that by destroying the credibility of the ECB. This is really, in a sense, the undertone of all our conversation today,” Draghi told the Financial Times.
While recognizing that austerity reforms must come hand in hand with policies that create jobs and foster growth and not be too draconian in nature, Draghi added that all nations must move forward if recovery is to unfold.
“Two further conditions have to be satisfied: Implementation at national level of the structural reforms needed to enhance growth and jobs creation. And finally, it is necessary to have the right euro area design, implementing the fiscal compact, so that the confidence is fully restored,” Draghi said.
“Austerity by one single country and nothing else is not enough to regain confidence of the markets – as we are seeing today.”
The euro, meanwhile, strengthened against the pound, with EUR/GBP rising 0.16% to trade at 0.8404.
Draghi is expected to make more public appearances later Monday, and any comments suggesting changes to ECB policy in favor of considering asset purchases or stonger opposition to the contrary will move the euro.
Also on Monday, the U.K. will release consumer confidence data.
In the U.S., the National Association of Home Builders will unveil its Housing Market Index (HMI), which measures single-family home sales.
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