The EUR/USD rebounded Wednesday after three consecutive losses, as European Central Bank President Mario Draghi indicated the central bank would need more time before deciding whether to add to its €1.1 trillion stimulus program.
“More time is needed to determine in particular whether the loss of growth momentum in emerging markets is of a temporary or permanent nature and to assess the driving forces behind the drop in the international price of commodities and behind the recent episodes of severe financial turbulence,” Draghi told the European Parliament’s Committee on Economic and Monetary Affairs on Wednesday.
Draghi’s remarks come less than a week after the United States Federal Reserve decided to keep its benchmark rate at record lows, highlighting emerging market risks as one of its major concerns. US economic growth is forecast to have slowed in the third quarter, further complicating the Fed’s plans to begin normalizing interest rates.
The EUR/USD climbed to a session high of 1.1175 in Europe. It would subsequently consolidate at 1.1170, advancing 0.4%. Despite the rebound, the EUR/USD remains range bound and is considered bearish below 1.1200. The pair is likely to face immediate resistance at 1.1181 and support at 1.1086.
The EUR/USD has experienced a volatile month, testing highs near 1.1600 and lows at around 1.1100.
In economic data, Eurozone manufacturing and services activity weakened slightly in September, data from Markit Group revealed. The Eurozone composite PMI, which tracks the performance of manufacturing and services, eased to 53.9 in September from 54.3 the previous month.
Despite the decrease, Eurozone PMI rounded off its best quarter for four years, signaling that the regional recovery was finally gaining traction.
Separately, US manufacturing PMI was unchanged in September at 53.0, preliminary data from Markit also showed.
European stocks came back strong on Wednesday after plummeting in the previous session amid an escalating emissions scandal involving Volkswagen. Eurozone blue-chip STOXX 50 climbed 0.9%. The FTSE 100 in London rallied more than 2% in intraday trade, while the DAX in Germany climbed more than 1%.
Oil prices also rebounded Wednesday. Brent crude for November delivery was up 29 cents or 0.6% at $49.37 a barrel on the ICE Futures exchange in Europe. West Texas Intermediate, the US benchmark, rose 23 cents or 0.5% to $46.59 a barrel.