LONDON — The euro is rallying on Friday, extending the near 1% gains it saw after ECB President Mario Draghi spoke following the bank’s monetary policy announcements on Thursday.
The currency surged despite Draghi striking a strongly dovish tone and saying that the ECB’s governing council has not yet discussed different scenarios for tapering its quantitative easing programme.
“There may have been no hints at tapering in September in today’s ECB statement or in Mario Draghi’s press conference but traders certainly found reason to drive the euro higher, something the ECB President was clearly trying to avoid,” Craig Erlam, senior market analyst at FX platform Oanda said in an email on Thursday afternoon.
“I don’t think Draghi could have possibly adopted a more dovish stance at the press conference without suggesting that tapering will not happen later this year.”
The euro has rallied further on Friday morning, climbing as high as 1.1674 against the dollar, a level not seen in two years. By 8.35 a.m. BST, it has pared some of its gains, but still remains well above $US1.16, as the chart below illustrates:
The euro’s recent gains add to a phenomenal turnaround for the single currency, which at the end of 2016 and beginning of 2017 was widely tipped to reach parity against the dollar in short order.
In April, for instance, strategists from Deutsche Bank Asset Management told Business Insider that the euro would hit parity during 2017. The driver of that forecast slump was said to be the increasing differential between interest rates on both sides of the Atlantic, as the US Federal Reserve continues to tighten policy in response to the strengthening US economy.
See the latest EUR-USD movements here.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.