The euro was initially sold at the start of the day as investors began to doubt comments from Mario Draghi, but EUR/USD managed to pare earlier losses by late morning after Le Monde reported that the ECB and eurozone governments are preparing for coordinated action.
According to the newspaper, the ECB and European Financial Stability Fund (EFSF) are planning to purchase Spanish and Italian government bonds on the primary market from September, in order to depress the cost of borrowing. The ECB will then revive its programme to buy government bonds on the secondary market, and also plans to grant a banking license to the European bailout fund. Le Monde also reported that German chancellor Angela Merkel and French president Francoise Hollande will meet today to discuss the plans.
The latest report surprised the market, as it suggests that Mr Draghi is seriously getting the ball rolling. As you can imagine, the euro shot up from an earlier low of $1.2243, to $1.2314. By 12.15pm (London time) EUR/USD was trading 17 pips higher at $1.2298.