The euro remains lower against the dollar following a speech given by ECB President Mario Draghi during a hearing of the Committee on Economic and Monetary Affairs of the European Parliament.
While the euro did find some support around Friday’s lows (1.0714) in the minutes following Draghi’ speech, the EUR/USD currency pair is still trading lower by 0.5% when measured against the Sunday open at 1.0790.
In his speech, Mario Draghi espoused the ongoing recovery of the EU economy and how beneficial ECB’s monetary policy has been over the last several years.
“Over the last two years GDP per capita has increased by 3% in the euro area, which compares well with other major advanced economies. Economic sentiment is at its highest level in five years. Unemployment has fallen to 9.6%, its lowest level since May 2009.”“Our monetary policy has been a key contributor to the positive economic developments I have described.,” he adds.
The ECB, like the Federal Reserve and Bank of England, has been trying to get inflation up to 2 percent over the medium term, but so far has been unable to achieve this goal.
Despite this, the ECB President insisted that an accommodative monetary policy is “needed if inflation rates are to converge towards our objective with sufficient confidence and in a sustained manner.”
Mario Draghi also dismissed the existence of any bubbles in asset, real estate and credit markets:
“Currently, we do not see compelling evidence at the euro area level of stretched asset valuations.”However, he also mentioned the potential for future bubbles to form if accommodating monetary policies are extended too much.
Euro banknotes photo by Michael Simmons