The euro remained suppressed near the lowest point against the U.S. dollar today and hit an eight-week low versus the sterling as market speculated that the European Central Bank will move in to rein any further strengthening of the 18-nation currency.
The euro was trading at $1.3815, slightly up from the intraday low of $1.3785 in light Tuesday trading after the lengthy Easter weekend. It also fell 0.1 percent against the British pound to trade at 82.01 pence, a two-month low.
ECB President Mario Draghi, who is expected to address a gathering on Thursday in Amsterdam, had repeatedly insisted that the ECB will intervene if the euro strengthens further. Other key policymakers have expressed concerns over the euro’s strength, including Benoit Coeure, a member of ECB’s executive board.
The strong euro has been blamed for the weak inflation in the euro zone. Draghi has said one of the measures that may be launched to reverse the situation is asset purchases. Most traders said that the euro won’t decline much unless the ECB moves in.
The market is currently awaiting Thursday’s report on the Germany’s business sentiment by German IFO Institute and the PMI survey of the euro zone tomorrow.
“Euro/dollar is likely to trade with a weaker bias this week given the German IFO and Draghi’s speech coming up,” Yujiro Goto, a currency analyst at Nomura told Reuters. “Any downside will be limited though, as investors will await the inflation data due next week.”
A German ZEW survey released last week showed that market sentiment fell in April, the fourth successive month owing to the Ukraine crisis. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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