The euro plunged to a two-month low against the yen as analysts speculated that the European Central Bank will roll out stimulus to boost the euro zone’s economy when it meets this June.
The euro declined 0.3 percent to 139.77 yen as of 10:04 a.m. in London after earlier touching 139.68, its lowest level since March 4. The shared currency remained slightly unchanged against the dollar at $1.3721 after earlier touching $1.3689, its lowest level since April 4. The Japanese currency surged 0.4 percent to 101.86 yen per dollar.
“It’s about the ECB now and euro weakness, rather than yen strength,” John Hardy, a Copenhagen-based head of foreign-exchange strategy at Saxo Bank A/S told Bloomberg. “There’s more noise from ECB officials today. We may see something in June that might not be just about shaving interest rates. There’s also a complacent yen short position out there.”
The euro’s decline was fuelled by comments from ECB Board Member Peter Praet who revealed that the bank is mulling plans to roll out more economic stimulus.
“We are preparing a range of measures,” Praet told German paper Die Zeit in an interview. “We could offer more long-term loans to banks, possibly against conditions. We could cut interest rates once again. A combination of measures is also thinkable.”
The euro has declined 1 percent over the last one week, making it the worst performing currency after the Swiss franc of the 10 advanced-economy currencies monitored by Bloomberg Correlation-Weighted Indexes. The dollar has advanced 0.5 percent while the yen has edged up 0.6 percent. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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