The European Central Bank left interest rate unchanged at the level of 0.00% as expected. ECB President Mario Draghi provided some interesting assessment during the press conference. He said, he wanted to stress that the ECB sees a weaker rush of recovery, but this is not a slowdown. He draws attention to the increase in lending supported by growing demand. Inflation will remain close to the current level for the next few months, and core inflation has strengthened, although it remains subdued. Draghi said that the internal cost pressure is increasing. Among the risks mentioned additionally trade, Brexit and Italy, although he points out that they are not big enough to disturb the balance. Nevertheless, President Draghi said that the Council "did not hold extensive discussions about Italy." He is convinced that the parties will be able to reach an agreement. It can be seen that Draghi tries to resist as neutrally as possible without causing unnecessary turmoil in the financial markets.
In the last words, President Draghi stated that it is not the ECB's task to act as a mediator in a budget dispute between the EC and Italy. Draghi only suggested that the Italian government should "soften the tone", and Rome needs legislative solutions to reduce the spread between Italian and German debt (the European measure of credit risk). In general, the conference does not bring any surprises, although after the EUR reaction it can be assumed that part of the market counted on a more positive tone.
Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market has failed to break through the technical resistance at the level of 1.1432 and reversed towards the technical support at the level of 1.1354, which is very close to the lower channel boundary. Currently, the price is trading close to the support and it looks like the bears want to test the level once again soon. In the case of a further sell-off, the next important technical support is seen at the level of 1.1300.
