The Euro held close to a 5-week trough versus the U.S. Dollar as investors’ speculation intensifies and reevaluates the likely next move of the European Central Bank. It seems that among FX players the view is that the ECB will likely provide some form of quantitative easing at its next policy meeting to be held in June. Since late last week when the head of the ECB reiterated that they were prepared for action the common currency has lost almost 2% of its value relative to its peer across the pond. A recent WSJ report said that the German central bank was also in full support of easing and using any tools necessary.
As reported at 1:55 p.m. (JST) in Tokyo, the EUR/USD pair edged up slightly higher to $1.3715, a gain of 0.1% but still not far from yesterday’s low of $1.3688; markets are waiting to see if the pair breaks below $1.3672 which was hit on April 4th and likely take the pair back to a level last seen in February. The EUR/GBP held at 81.41 Pence, remaining only a few pips away from yesterday’s 16-month low.
BoE Data Eyed
Markets will turn their focus to the Bank of England which will release its inflation report as well as labor data later today. Markets are anxious for more hints at the likely direction that the BoE will take given the recent improvement in the U.K.’s economy. Analysts at JPMorgan believe that the BoE will confirm its intent to begin tightening early in 2015, provided that inflation pressures don’t weigh.