Forex - EUR/USD edges lower as Draghi says policy will stay loose

Investing.com - The euro traded lower against the dollar on Wednesday after European Central Bank President Mario Draghi said monetary policy will likely stay loose for now and urged eurozone political leaders to push through fiscal and other economic reforms to spur recovery.

In U.S. trading on Wednesday, EUR/USD was down 0.70% at 1.2989, up from a session low of 1.2985 and off from a high of 1.3088.

The pair was likely to find support at 1.2837, the low from May 29, and resistance at 1.3151, Tuesday's high.

Speaking in the French parliament, Draghi said the ECB’s plan to adjust loose monetary policy “remains distant” but added that the bank expects a "gradual recovery" by the end of this year.

Mario's dovish comments weakened the euro substantially despite softer-than-expected economic growth revisions hitting the wire in the U.S.

The Commerce Department said U.S. gross domestic product expanded at an annual rate of 1.8% in the three months to March, below an earlier estimate of 2.4% growth. Economists had expected the growth rate to remain unchanged at 2.4%.

The report said consumer spending was revised down from 3.4% to 2.6%.

The numbers dampened hopes for the Federal Reserve to scale back stimulus measures such as its monthly USD85 billion bond-buying program in the coming months.

Stimulus programs weaken the dollar to spur recovery, and Fed Chairman Ben Bernanke has said any decision to taper asset purchasing will depend on economic data.

Still, the dollar remained firm against the euro, as recent manufacturing, confidence and housing-sector reports continue to paint a picture of a U.S. economy moving forward along the road to recovery.

Elsewhere, Germany’s Gfk consumer climate rose unexpectedly, data showed.

In a report, research group Gfk said that its forward-looking index of Germany’s consumer climate rose to 6.8 looking forward to July from 6.5 for June.

Analysts had expected Gfk consumer climate to remain unchanged at 6.5 last month.

The euro, meanwhile, was down against the pound and down against the yen, with EUR/GBP trading down 0.06% at 0.8478 and EUR/JPY trading down 0.91% at 126.78.

On Thursday in the eurozone, European Union leaders are to hold the first day of a two-day economic summit. Germany is to release official data on the change in the number of people unemployed, a leading economic indicator.

Also Thursday, the U.S. is to release the weekly government report on initial jobless claims along with data on personal income and expenditure, which is to be followed by private sector data on pending home sales.