Forex Flash: ECB commitment to the euro is vastly underestimated - BBH

FXstreet.com (Barcelona) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman notes that comments from ECB President Draghi reiterating that the commitment to the euro is "vastly under-estimated" has helped the euro claw back its earlier losses entirely, and a move above $1.2855, especially on a close basis, would be a very constructive technical development.

He notes that Draghi seemed to get frustrated at the press conference with hypothetical questions about a Cyprus exit, to which he commented that there is no Plan B. Further, Chandler notes that Draghi argued that Cyprus is neither a turning point nor a template which has been his view as well. He writes, “Each episode during the crisis has seen European officials innovate and build institutional capacity. It is not quite the same EU or ECB as it was in 2010 when the Greek revelations were first made.” Separately, he adds that Draghi noted that the Emergency lending Assistance does not have seniority and ELA is loans from a national central abnk. He writes, “Banks turn to the ELA facility when they do not have collateral acceptable to the ECB. This seems to throw the ELA out of the official sector and toward the sector that can participate in haircuts and losses.”