The Euro managed to hold on to gains made overnight but analysts expect that those gains were likely limited in the wake of relatively tepid data on Eurozone inflation. According to the data, May inflation slowed even further, and for analysts, that all but ensures that the European Central Bank will make a decision toward further easing at tomorrow’s policy announcement. On Monday, inflation figures from Germany set the stage for a disappointment which, says analysts, likely resulted in the covering of bearish Euro positions.
As reported at 11:14 a.m. (JST) in Tokyo, the EUR/USD traded at $1.3620, edging away from the recently struck 4-month low at $1.3585. The EUR/JPY also edged higher to a 3-week peak at 139.78 Yen. The Euro’s minimal gains allowed it to push the U.S. Dollar Index lower and off the recently struck 3½ month high to 80.573 .DXY, down from Monday’s peak at 80.681 .DXY.
ECB Decision Looms
Analysts expect that the ECB is likely to be bringing out a tool bag full of options which could include an across-the-board rate cut and measures specifically aimed at increasing lending and credit to smaller and mid-sized enterprises. Some analysts believe that the ECB may also announce another LTRO.