The euro reversed its earlier gains slightly following talks by key European Central Bank policymakers that measures are in the offing to prevent further advances.
The euro plunged 0.3 percent against the yen, the pound and the dollar. The 18-nation currency was trading at $1.3848 on Monday in Europe after gaining 1.5 percent in the past week, its strongest weekly advance since last September. The currency was trading at 140.70 yen and 1.2149 Swiss francs.
Though the ECB officials have tended to ignore the euro most of the time, this is changing following the rising prices in member states. Over the weekend, ECB President Mario Draghi said that if the currency strengthens further, quantitative easing policies will be rolled out. The head of the Bank of France Christian Noyer backed this when he said on Monday that “the stronger the euro is, the more accommodative policy is needed.”
“What is telling is the extent to which the euro is strong even in the face of all of this,” Simon Derrick, the London-based head of strategy at Bank of New York Mellon told Reuters.”I’d be daft to say the euro might not weaken a bit further in the next 24 hours or so, but after that I think we certainly will be having another look at $1.39 and $1.40.”
The euro held firm despite reports of escalating tension in Ukraine. The country set a Monday morning deadline for pro-Russian rebels to lay down their weapons or be ready for a “full-scale anti-terrorist operation” which will be done by its armed forces.
The dollar remained slightly unchanged against that yen at 101.620, which is better than last week’s low of 101.30. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at email@example.com