Euro rises third day after Draghi signals stimulus may not be needed in December

“If we are convinced that our medium-term inflation target is at risk, we will take the necessary actions,” Draghi said in an interview with Italian Il Sole 24 Ore published on Saturday.

“We will see whether a further stimulus is necessary,” he said, adding that it was too early to decide whether to press the deposit rate further below zero.

The shared currency strengthened after the news with EUR/USD last trading at 1.1046, up 0.35%.

On October 22, the ECB head said at a press conference in Malta that the Governing Council would re-examine its current stimulus policies, including the size, duration and composition of its quantitative-easing program, when it meets on December 3.

His U.S. peer, Janet Yellen, and officials signaled last week they remain ready to raise their key rate before the year-end.

Elias Haddad, a currency strategist at Commonwealth Bank of Australia in Sydney said that the EUR/USD upside will be capped this week because there is still a risk of ECB aggressive easing measure. “There is scope for U.S. interest-rate expectations to adjust higher in support of the dollar this week.”

As Bloomberg reports, hedge funds and other massive speculators expanded bearish bets against the euro by 43,368 contracts to 105,934 in the week ended Oct. 27, the highest increase in Bloomberg data going back to the currency’s 1999 debut.

The dollar index dropped before U.S. payrolls data this week that will help the Federal Reserve decide whether to hike interest rates in December. Bank of Japan chief Haruhiko Kuroda and his colleagues declined to expand stimulus when they met on Friday.

The Australian and New Zealand dollars erased earlier losses after a gauge of China’s manufacturing industry improved in October with AUD/USD last trading at 0.7146, up 0.13%, and NZD/USD down 0.29% at settle at 0.6762.