Draghi Doesn’t Rock The Boat

ECB President Mario Draghi ends his eight-year mandate this October and market participants are now starting to wonder what direction the central bank will take after his tenure finishes. In the interim it seems that Mr. Draghi, true to form, has been compelled to not rock the boat ahead of the upcoming European elections this May. No surprise there as Euro skeptical parties are already polling double digit increases, almost assuring a decisive defeat of the current status quo in Brussels.

So dovish it shall be once again with predictable reactions across forex and the futures. In a desperate effort to preserve whatever remains of his legacy/credibility, and to keep the EU train from completely hurdling off its rails, Draghi just committed to keeping rates low for the remainder of 2019 in combination with a new series of targeted longer term loans.

Not surprisingly the EUR/USD has dropped lower but I wouldn’t read too much into it just yet as our bearish inflection point of 1.1234 thus far remains intact. As I’m writing this the press conference is ongoing and knowing Draghi’s loose lips may serve ample ammunition for a few more gyrations before the EUR finally picks a direction.

Not much of a response the USD/JPY which remains barked right above the 100-day SMA. I’m tempted to grab a long position here but would like to see ab it more of a retest. In a pinch I will grab a breach > 112.122 in anticipation of a short squeeze.

King Dollar once again rules the day. I’m now moving my stop to about 1.2R and my preliminary target range has been set to ~97.5 where I will re-assess the situation.