Nearly a week after the European Central Bank announced new stimulus measures to ensure that the Eurozone economy recovers, the Euro is languishing close to a 4-month trough relative to its U.S. counterpart, driven especially by the widening yield differential between government debt issuances. According to analysts, the recent rise in U.S. Treasury bond yields suggests that investors believe that the Federal Reserve is likely to implement a rate increase ahead of expectations, speculation that is helping to support the Dollar in FX trade.
As reported at 10:33 a.m. (JST) in Tokyo, the EUR/USD traded 0.1% lower to $1.3529, staying within striking distance of last week’s low at $1.3503, set in the aftermath of the ECB rate decision. The USD/JPY was steadily trading at 102.38 Yen, with FX traders wary ahead of a policy decision from the Bank of Japan later this week, though expectations are that the BOJ will maintain policy given an improved economic outlook.
Euro Resiliency Anticipated
Since the beginning of the year, the Euro has lost nearly 1.5% of its value against the greenback, but continual recoveries suggest to investors that the Euro is more resilient than anticipated with some expecting it could recover against the dollar before too long which could prompt further actions by the ECB.