Forex - EUR/USD higher on Draghi's bond program

Investing.com - The euro traded higher against the U.S. dollar Thursday,  fuelled by  European Central Bank President Mario Draghi revealing details of the banks bond purchasing program, while upbeat U.S. economic data dampened expectations for more easing from the Federal Reserve.

EUR/USD hit 1.2562 during U.S. trade, the session low; the pair subsequently consolidated at 1.2627, gaining 0.22%.

The pair was likely to find support at 1.2500, Wednesday’s low and resistance at 1.2650, the session high and a two-month high.

Supporting the single currency,  Draghi outlined a new bond purchasing program, dubbed Outright Monetary Transactions, which he said will provide "a fully effective backstop" against market volatility. 

Draghi said "strict and effective conditionality” was an essential element of the plan, under which the ECB would unlimited amounts of government bonds of up to three years in maturity, as long as the country in question is signed up to the OMT program and agrees to economic reforms. 

The ECB also slashed its forecast for economic growth for this year, to a contraction of 0.6%, from a previous forecast for a 0.2% contraction.

The bank maintained the benchmark interest rate at a record-low 0.75% at its policy meeting earlier in the day, in line with expectations.

In greenback positive news, a report by payroll processing firm ADP indicated non-farm payrolls rose by 201,000 in August, beating expectations for a 140,000 increase, after a rise of 173,000 the previous month. 

Meanwhile, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits last week fell to 365,000 from 377,000, against expectations for a decline to 370,000.

The previous week’s figure was revised up to 377,000 from a previously reported 374,000.

The euro was flat against the pound, with EUR/GBP traded even to 0.7924, but extended gains against the broadly weaker yen, with EUR/JPY up 0.93% to 99.70.