Forex - EUR/USD drops to session lows on dovish Draghi comments

Posted on at - The euro traded near session lows against the dollar on Friday after European Central Bank President Mario Draghi reiterated that monetary authorities will do whatever it takes to prop up the economy, which markets interpreted as a sign that more stimulus programs may be on the way.

Forex - EUR/USD drops to session lows on dovish Draghi commentsEuro slides as Draghi says economy soft, authorities stand ready to act

In U.S. trading, EUR/USD was down 1.24% at 1.2386, up from a session low of 1.2385 and off a high of 1.2575.

The pair was likely to find support at 1.2503, Thursday's low, and resistance at 1.2600, Wednesday's high.

The euro came under pressure after ECB President Mario Draghi reiterated on Friday that the central bank is prepared to act rapidly if low inflation persists.

Draghi also expressed concerns over the euro zone's weak growth, pointing out he saw no improvements in the coming months.

The ECB head was speaking at the 24th European Banking Congress "Reshaping Europe," in Frankfurt, and his comments sparked expectations for fresh stimulus.

The ECB's current stimulus program includes purchases of asset-backed securities and covered bonds, though markets are keeping a close eye out for plans to announce purchases of government debt, a stimulus tool known as quantitative easing.

Upbeat U.S. data released on Thursday continued to support the dollar as well.

The Federal Reserve Bank of Philadelphia reported that its manufacturing index improved to 40.8 this month from 20.7 in October.

Analysts had expected the index to decline to 18.5 in September.

Also on Thursday, the Labor Department reported that the U.S. consumer price index was unchanged in October, beating expectations for a 0.1% dip.

On a year-over-year basis consumer prices rose 1.7% last month, unchanged from September, and stronger than market calls for a 1.6% jump.

Core inflation, which strips out volatile food and energy components, rose by 0.2% during the month, pushing the annual rate up to 1.8%, both figures in line with market forecasts.

Elsewhere, the euro was down against the pound, with EUR/GBP down 1.00% at 0.7913, and down against the yen, with EUR/JPY down 1.61% at 145.84.

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