The euro fell against the US dollar and the Japanese yen and erased its earlier gains versus the Great Britain pound during the Thursday’s quiet trading session as speculations about monetary stimulus from the European Central Bank continue to undermine the currency’s strength.
Market participants continue to anticipate that the ECB would ease its monetary policy in December (actually as soon as the next week). At the same time, most of them also expect monetary tightening from the Federal Reserve next month. The policy outlook divergence makes the dollar more attractive and the euro less appealing.
It is worth to remember that the ECB, despite all its talk, may actually do not deliver and refrain from acting. After all, the speculations about potential stimulus have done a nice job in weakening the euro, the outcome that is desirable for the central bank as it helps the economy and inflation. And that means that policy makers might simply decide that their work has already been done and there is no need to act.
EUR/USD fell from 1.0624 to 1.0609 as of 22:02 GMT today, hanging near the seven-month low. EUR/JPY dropped from 130.37 to 130.06, also staying near the lowest level since April. EUR/GBP attempted to rally, rising from 0.7022 to 0.7043 intraday, but backed off to 0.7024 as of now.
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