European Central Bank: Interest Rate to Remain at 4%

Following the decision by the (ECB to keep interest rates unchanged at 4%, the U.S. Dollar fell against major currencies.  On April 12, 2008 at 10:50 am (00:50 GMT) in Sydney, the Euro traded at $1.5763 compared to $1.5742 while the U.S. Dollar traded at 101.88 Yen compared to 101.95 Yen in late trading in New York.

At one point, the Euro hit a high of $1.5914 in the anticipation that Jean-Claude Trichet might maintain a strong stance against an interest rate reduction during the policy meeting held yesterday, April 11, 2008.  However, the Euro dropped slightly following Trichet’s warning that tension in the financial markets could last longer, and negatively impact the economies in the Euro Zone more than previously expected.

Foreign exchange volatility was also a concern of Trichet, as he described it as excessive and “deplorable.”  It is expected that officials from the Euro Zone will raise their concerns about the strong Euro during this weekend’s G7 meeting in Washington, D.C.

According to Ian Copsey of Global Forex Trading, “anything above $1.5901 is risky,” and that the Euro has probably reached its peak and it’s likely to fall back.

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