EUR/USD upsurge halted ahead of mid-1.2500s

   •  Draghi’s showed concerns over the recent FX volatility.
   •  Bullish momentum loses steam on fading rate hike prospects. 

The shared currency maintained its strong bid tone through the early NA session, pushing the EUR/USD pair through the key 1.2500 psychological mark for the first time since December 2014.

After holding steady near the 1.2400 handle, following the ECB decision to leave interest rates/QE unchanged, the pair caught some strong bids and was being supported by some hawkish comments by the ECB President Mario Draghi.

During the post-meeting press conference, Draghi said that the EZ economy has accelerated more than expected, which gives more confidence that inflation will head toward 2% target. Rising medium-term inflation hopes was evident from a sudden spike in the key 10-year German Bunds, to levels last seen in July 2017, which underpinned the shared currency. 

The bullish momentum, however, already seemed losing steam and the pair quickly retreated over 50-pips from session tops as Draghi raised concerns over the recent FX volatility, which could be a source of uncertainty for short-term price stability and saw very few chances of a rate hike this year. 

Answering to a question on the recent sharp appreciation of the shared currency, Draghi said that the ECB does not target exchange rates, albeit it remains an important factor for growth/inflation. 

Technical levels to watch

Subsequent retracement below mid-1.2400s is likely to get extended towards the 1.2400-1.2390 region, below which the pair seems vulnerable to head towards testing 1.2320 support area.

On the upside, momentum back above the 1.25 handle might continue to confront fresh supply near the 1.2540-50 region, which if cleared should pave the way for an extension of the pair's bullish momentum.