Expectations continue to grow higher that the European Central Bank is poised to provide additional accommodation which will further weaken the Euro; as a result, in preparation for that likelihood, the Euro fell broadly in Asian trading. At the same time, the Swiss Franc’s recent rally stemming from an escalation of global geopolitical tensions also came to an abrupt halt.
As reported at 12:21 p..m. (JST) the EUR/USD fell to an 8-month trough to $1.3459 while the EUR/AUD traded lower at A$1.4304; the EUR/JPY also slid to a 5-month low at 136.58 Yen, with this year’s low now in sight. BNP Paribas’ analysts said that earlier support for the common currency as a result of capital inflows are in the process of unwinding. Further, they noted that the potential widening of the interest rate gap between the U.S. and the Eurozone is also adding weight to the argument that the Euro still has more scope for additional weakening.
Euro’s Fall Helps Lift Dollar Index
The U.S. Dollar Index was pushed higher as a result of the Euro’s fall, and was trading at a 6-week high at 80.837 .DXY; with numerous data releases coming out this week, many of them highly watched and relevant, it is possible that the Dollar could see some further appreciation in the days ahead.