The Euro remained close to a 6-week trough versus its U.S. counterpart as dovish expectations of a possible interest rate cut by the European Central Bank continue to grow. Falling yields on government treasuries both in the U.S. and Germany also supplied some pressure to the common currency. According to one media outlet, the European Central Bank is likely to trim interest rates across the board as well as put in place measures that would encourage bank lending to smaller and mid-sized enterprises. Market strategists tended to concur with that likelihood, noting that the ECB’s options were limited.
As reported at 11:25 a.m. (JST) in Tokyo, the EUR/USD traded at $1.3719, well off last week’s 2½ year peak when the pair hit $1.3995 ahead of the central bank’s policy decision. Earlier this week, the pair hit a 6-week trough at $1.3688 and trading has been within a fairly narrow range.
Japanese Growth Briefly Revives Yen
Meanwhile, falling yields on U.S. Treasuries pushed the greenback lower against the Yen, with the USD/JPY dropping 0.1% to 101.85 Yen after falling 0.35% on Wednesday. The pair had actually dipped to 101.66 Yen earlier after it was reported that the Japanese economy had unexpectedly strong growth in the first quarter but given that the Bank of Japan is committed to keeping the Yen as weak as possible meaning they would intervene if necessary, the Yen’s appreciation against the greenback was a brief one.