FXStreet (Delhi) - Derek Halpenny, Research Analyst at MUFG, notes that the euro remains very resilient and in the face of renewed equity market declines in the last few days has drifted higher again. Key Quotes “The ECB will certainly be mindful of this development and while the euro is not a specific target, avoiding an “unwarranted tightening of the monetary stance” certainly is and President Draghi has stated frequently that the ECB will not allow this to happen.” “Financial conditions have improved but remain more restrictive than has been the norm since QE was implemented. ECB Executive Board Member Mersch in an interview today stated that the ECB was mindful of second round effects from the fall in crude oil prices. He did however play down the concerns over China suggesting that the reaction to recent events may have been overdone.” “Still, it must be concerning for the ECB when you consider the recent data from Germany. The ZEW sentiment drop yesterday was just the latest bad news and followed the trade data that revealed a 5.2% tumble in exports in August, the largest m/m drop since January 2009 during the worst period of the fallout following the collapse of Lehman Brothers in September 2008.” “While we understand that the euro is deriving support from the change in flows due to the increased financial market volatility and due to easing Fed hike expectations, we believe the market is under-estimating the potential for ECB action.” For more information, read our latest forex news.