Forex - EUR/USD hits session highs after Draghi comments

The euro extended gains against the dollar on Thursday to hit session highs after European Central Bank Mario Draghi said monetary policy will remain firmly accommodative and added that confidence was returning to financial markets.

EUR/USD hit 1.3097 during European afternoon trade, the pair’s highest since March 1; the pair subsequently consolidated at 1.3084, gaining 0.90%.

The pair was likely to find support at 1.2965, the session low and a three-month low and resistance at 1.3146, the high of February 27.

Speaking at the ECB’s post-policy meeting press conference, Draghi said that inflation expectations remain firmly anchored but added that there is evidence that economic weakness has extended into the early part of this year.

The ECB kept rates on hold at a record low 0.75% in a widely anticipated decision.

The ECB revised down economic forecasts for 2013, with euro zone gross domestic product now expected to contract by between 0.1% and 0.9% from a previous forecast for growth of between 0.3% and a contraction of 0.9%.

Draghi said policymakers discussed a rate cut but the "prevailing consensus" was to leave interest rates unchanged at 0.75%.

The euro gained ground against the pound and the yen, with EUR/GBPrising 0.54% to 0.8683 and EUR/JPY jumping 1.35% to 123.66.

The Bank of England voted to leave interest rates on hold at a record low 0.5% and keep the size of its asset purchase program unchanged at GBP375 billion earlier Thursday.

Elsewhere Thursday, the Bank of Japan left the size of its asset purchase program on hold at JPY76 trillion at Governor Masaaki Shirakawa’s final meeting before incoming governor Haruhiko Kuroda takes over next month.

In the U.S., the Department of Labor said the number of individuals filing for initial jobless benefits fell by 7,000 to a seasonally adjusted 340,000 last week, compared to expectations for an increase of 8,000 to 355,000.

A separate report showed that the U.S. trade deficit widened to a seasonally adjusted USD44.5 billion in January from a deficit of USD38.1 billion the previous month.