The euro extended its losses against the dollar for the second straight day as the market awaited speeches by the European Central Bank President Mario Draghi and the Federal Reserve Chair Janet Yellen.
The shared currency plunged to the lowest level in 21 months against the pound following comments by French Prime Minister Manuel Valls that the ECB will need to take more action to lower the value of the euro. The dollar halted its five-day losing streak against major counterparts as investors awaited Yellen’s speech on Wednesday in Washington.
The euro plunged 0.1 percent to trade at $1.3661 as of 11:02 a.m. in London after earlier surging to $1.37 on Tuesday, its highest point since May 21. The currency fell 0.2 percent to 138.60 yen, while the yen slid 0.1 percent to trade at 101.46 per dollar.
“The market is just trying to weigh up what’s going to come out,” Jane Foley, a London-based senior currency strategist at Rabobank International told Bloomberg. “Given the euro-dollar exchange rate’s importance for the disinflationary risk, there is some anticipation that Draghi will be dovish. Janet Yellen is, of course, due to speak. There is the opportunity for her to answer a question on monetary policy and potentially re-establish her dovish theme.”
The pound traded near its strongest level in six years after a report indicated that Britain’s housing prices grew the quickest in over nine years in June. The pound also got a boost from Tuesday’s data that showed that U.K. manufacturing activity grew the quickest in seven months, boosting prospects of an interest rate hike soon.
The pound traded at $1.7150, close to $1.7167 that it touched on Tuesday, its strongest level since October 2008. The U.K. currency was also trading close to its strongest level in 1 ½ years of 79.705 pence per euro. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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