The Euro slipped versus the U.S. Dollar during the Asian trading session earlier, but holds close to a 4-month peak as traders speculate that Friday’s dismal labor report out of the U.S. will finally prompt the Federal Reserve to launch additional stimulus measures. The Euro which was still receiving some support from last week’s ECB pledge to help troubled nations find reasonably priced loans for sovereign debt has since slipped about 0.2% from Friday’s high of $1.2818, and as at 1:05 p.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.2790. Analysts expect that any downside to the pair will be limited by the upcoming Fed meeting, the conclusion of which is Thursday when an announcement will be made by Fed chief, Ben Bernanke.
Markets are already considering the strong possibility of QE3, and one analyst said that if that market belief is realized and a German ruling in favor of the Eurozone’s bailout mechanism is announced on Wednesday, the common currency could see a rise back toward $1.30, with gains limited by Spanish and Greek developments.
The U.S. Dollar Index, the gauge of the greenback’s strength relative to other major currencies, is trading at 80.272 .DXY mired close to a 4-month trough which was struck on Friday when the index hit 80.151 .DXY.