The euro plunged to a seven-week low against the dollar last week after the European Central Bank hinted that it may boost stimulus next month, stopping the shared currency right in its tracks and ending an impressive growth that has seen it touch its highest point since 2011.
The euro plunged 0.8 percent to $1.3758 last week in New York trading, its steepest decline since the week ended March 21. The euro hit $1.3993, its highest level since the end of October 2011. The 18-nation currency fell 1.2 percent to 140.13 yen. The yen surged 0.3 percent to 101.86 a U.S. dollar.
Federal Reserve Chair Janet Yellen said last week that the U.S. economy still needs further stimulus, reducing the demand for the greenback. It also sent most emerging-economy currencies soaring.
The euro has advanced 5.2 percent over the past year, making it the third-best performing currency out of the 10 advanced economies –currencies monitored by Bloomberg Correlation-Weighted Indexes. The yen has declined 2.2 percent, while the greenback has plunged 0.9 percent.
European Central Bank President Mario Draghi said last week that ECB’s officials will be “comfortable” with boosting the stimulus in June.
“This is the last time that Draghi can maintain credibility with verbal intervention, and so it’s really time for them to deliver,” Mark McCormick, a New York-based macro strategist at Credit Agricole SA told Bloomberg.
Economists at UBS, JPMorgan Chase, Danske Bank, Nordea Bank and UniCredit have revised their estimates to predict that the ECB will slash its target interest rate, which currently stands at an all-time low of 0.25 percent, in its June 5 meeting. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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