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Forex News: Euro Falls After ECB's François Villeroy Calls For

Euro Falls After ECB's François Villeroy Calls For Sustained Stimulus

03/22/2017 - 07:37:00 (RTTNews)

(RTTNews) - The euro declined against its major counterparts in the European session on Wednesday, as the Bank of France Chief François Villeroy de Galhau argued that the appropriate time for the winding down of stimulus measures has not yet been reached and the European Central Bank should continue accommodative monetary policy to progress towards inflation goal.

"Without monetary stimulus, the recovery in inflation would not yet be self-sustained or durable throughout the euro area," Villeroy told a business conference in Frankfurt.

"That is why we are maintaining an accommodative stance while adapting its intensity."

The bank's stimulus measure are working well, with both headline and underlying inflation expected to converge close to the target in 2019.

"Given this progress, should we stop pursuing an accommodative monetary policy? At this stage, the answer is clearly no," Villeroy added.

The currency was also weighed by worries about whether President Donald Trump will be able to deliver his promises on reforming regulations, increasing infrastructure spending and lowering corporate taxes.

Trump told House Republicans Tuesday that they could lose re-election in the 2018 midterms if they vote against the GOP health care bill planned for Thursday. It is feared that a failure to approve the Obamacare replacement plan could endanger more of Trump's legislative and policy agenda.

Data from the European Central Bank showed that the euro area current account surplus declined to a 15-month low in January.

The current account surplus fell to EUR 24.1 billion in January from EUR 30.8 billion in December. This was the lowest since October 2015, when the surplus totaled EUR 23.4 billion.

The euro held steady against its major rivals in the Asian session, with the exception of the yen.

The euro reversed from an early high of 1.0776 against the greenback, edging down to 1.0776. The euro is poised to target support around the 1.06 region.

The euro fell to a 3-week low of 119.79 against the yen, 5-day low of 1.0706 against the franc and more than a 2-week low of 0.8643 against the pound, off its early highs of 120.84, 1.0746 and 0.8669, respectively. The next possible support for the euro may be found around 119.00 against the yen, 1.06 against the franc and 0.85 against the pound.

The 19-currency retreated to 1.4073 against the aussie, from an early 9-day high of 1.4117. On the downside, 1.39 is possibly seen as the next support level for the euro.

Looking ahead, U.S. house price index for January and existing home sales for February are set for release in the New York session.

At 3:45 pm ET, the Bank of Canada Deputy Governor Lawrence Schembri speaks about business investment and the economic outlook at the Greater Vancouver Board of Trade.

For comments and feedback: contact editorial@rttnews.com

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