As the end of this quarter draws to a close, the common currency Euro is poised to record its single worst quarter ever. In this quarter alone, the Euro has depreciated of nearly 11% of its value against the US Dollar, driven in major part by the European Central Bank’s massive easing program and a policy that continues to diverge from that of the Federal Reserve. Earlier, Eurostat reported that the seemingly ongoing fall in consumer inflation slowed slightly from February, but that failed to provide any comfort to FX traders.
As reported at 10:41 am (GMT) in London, the EUR/USD was trading lower at $1.0730, not too far from the session low of $1.0714. The EUR/JPY was also lower at 128.7600 Yen, closer to the low end of a fairly broad daily trading range of 128.6554 Yen at the bottom and 130.2587 Yen at the top.
[CAD:FXAcademy CTA #75]Divergence of Policy is Key
Analysts say that as far as the EUR/USD’s direction, investors will be eyeing data from the back side of the pair, especially this Friday’s release of private labor data. One analyst in London pointed out that even when data in the Eurozone is positive the bottom line is that the Euro is still a QE currency, while in the US, the opposite holds true, with the Dollar benefiting from a tighter policy even when data doesn’t necessarily support it.