The Euro reversed course during the Asian trading session following comments made by officials of the European Central Bank which suggested that the accommodative policy would remain in place for quite sometime. The ECB head, Mario Draghi, as well as two other officials, yesterday reiterated the ECB position that, unlike the Federal Reserve’s intentions, stimulus plans would not be wound down anytime time soon. Analysts believe that the intent of the ECB is exactly that; to highlight the contrast between the monetary policies of the world’s major central banks.
As reported at 2:32 p.m. (JST) in Tokyo, the EUR/USD pair had dropped to a 4-week trough and was trading at $1.2984 before recovering to 1.3027; since mid-June the Euro has lost about 3% of its value relative to the greenback. The EUR/JPY pair lost as much as 0.7% and dropped to 126.57 Yen, a 1-week low, while the NZD/JPY skidded more than 1 to NZ$11.6574, a 2-week trough. The increased pressure on the common currency, as well as quarter-end purchases, has given some support to the U.S. Dollar Index which climbed to 83.025 .DXY, June’s high price thus far, and a rise of 0.4%.