The Euro gave back modest gains following comments made by Mario Draghi, head of the European Central Bank who said that he and the ECB were prepared to do whatever was necessary in order to hold market rates at bay and avoid further damage to the fragile Eurozone economies, including additional liquidity injections. Those comments which followed the release of Market PMI data which showed Eurozone’s business activity growing unexpectedly more robust in September; while positive news that the Eurozone economy is on the mend, Draghi is worried about how a stronger Euro might affect some the Eurozone’s more fragile economies.
As reported at 1:33 p.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.3494, steadying after a 0.2% loss on Monday in the wake of Draghi’s comments. Some currency strategists believe that Draghi could be poised to act if the Euro looks to trade beyond the $1.35 level.
Federal Reserve Remains Decidedly Dovish
Meanwhile dovish comments made by a member of the Federal Reserve suggested that the U.S. central bank intended to keep the greenback under tight control. The Fed surprised market players last week when they elected to keep the status quo of an ultra loose monetary policy, and William Dudley, head of the Fed’s New York branch, reiterated that the Fed must fight against any perceived threats to the U.S. economy.