The Euro continues to remain under pressure and vulnerable after European Central Bank head raised expectations that monetary policy in the Eurozone is about to undergo a shift to a looser strategy. At a 2-day ECB-run forum in Portugal, Mario Draghi said yesterday that the central bank should be “particularly watchful” as regards the enduring low inflationary trend in the Eurozone and that it could warrant pre-emptive action. To FX players, that was a clear indication that easing is on the way, though more comments are expected from Draghi later today which could solidify investors’ speculation.
As reported at 12:24 p.m. (JST) in Tokyo, the EUR/USD edged higher to $1.3658 but remains within striking distance of Monday’s 3-month trough at $1.3615. The EUR/JPY gained about 0.2% to trade at 139.26 Yen. The USD/JPY slipped to 101.96 Yen, close to Monday’s peak of 102.05, a fresh 1½ week high.
ECB Packing its Easing Tools
Media is reporting that the European Central Bank, in preparation for its next policy meeting which concludes on June 5th, is preparing an assortment of possible options which could include a cut in interest rates and other measures targeted specifically at boosting lender to the Eurozone’s smaller enterprises.