The euro fell for the second successive week against the dollar as investors fretted over the deviating Federal Reserve and European Central Bank policies.
The currently hit the lowest point in four weeks, fuelled by comments from key officials such as Bundesbank President Jens Weidman; who said the risk of deflation is low, while ECB Governing Council member Jozef Makuch cited higher deflation risks.
“The sense that the ECB needs to react is very strong; their delivery tends to be somewhat disappointing,” Sebastien Galv, a New York-based senior currency strategist at Societe Generale SA told Bloomberg. “We’re starting to see the beginning of divergences in policies, which we haven’t seen for many years, and that is very good for the foreign-exchange market.”
The euro plunged 0.3 percent versus the dollar to $1.3752 in New York this week, after declining 0.9 percent the previous week. It hit $1.3705 on Friday, its lowest point since Feb. 28. The last time the currency fell for two consecutive weeks was in the 10 trading days that ended on Nov. 8. So far, it has declined 0.4 percent this month.
The 18-nation currency inched 0.3 percent higher against the yen to 141.40, with a cumulative monthly increase of 0.7 percent in March. The yen plunged 0.6 percent to 102.83 a dollar, making its total monthly drop average 1 percent.
Over the past three months, the euro has fallen 1.1 percent against a basket of 10 developed-country currencies as measured by Bloomberg Correlation-Weighted Indexes. The dollar has declined 1.2 percent, while the yen has gained 1.4 percent.
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