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Forexpros – The euro traded solidly higher against the U.S. dollar Wednesday, as European Central Bank President Mario Draghi stated the ECB stands ready to act if the economy slips lower.
EUR/USD hit 1.2555 during U.S. afternoon trade, the session high; after bouncing from a low of 1.2441.
The pair was likely to find support at 1.2409, Tuesday’s low and near-term resistance at 1.2573, the high of May 29.
Speaking at the ECB’s post policy meeting press conference, Draghi said that there were downside risks to the European economy, stemming from the debt crisis in the region and its growing potential to spill over to the wider economy.
However, Draghi stated the ECB stands ready to help support the economy should things deteriorate in the euro zone giving strength to the single currency.
The ECB president went on to say the central bank would extend its policy of lending to banks until mid-January 2013 but didn’t announce any new three-year lending operations, disappointing expectations for fresh easing measures to stabilize markets.
Earlier Wednesday, the ECB left euro zone interest rates unchanged at 1%, in a widely expected decision.
The decision came one day after Spain warned that it was having difficulty accessing credit markets, while uncertainty over the outcome of Greek elections on June 17 also weighed.
The greenback remained broadly weaker ahead of Congressional testimony by Fed Chairman Ben Bernanke on the outlook for the U.S. economy on Thursday, amid speculation that the U.S. central bank is mulling new measures to stimulate growth.
The euro was lower against the pound, with EUR/GBP slipping 0.14% to hit 0.8082, but remained sharply higher against the yen, with EUR/JPY rallying 0.93% to hit 98.95.
In addition Wednesday, revised data showed that euro zone economic growth remained flat in the first quarter, in line with preliminary estimates, but gross domestic product contracted at an annualized rate of 0.1% in the three months to March, compared to a preliminary flat reading.
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