Hopes for the coming European Central Bank policy meeting were driving the euro higher today. Yet the rally stalled and then failed completely. As a result, the shared 17-nation currency ended the trading session in the negative territory.
The euro was rising during the first half of the trading session. ECB President Mario Draghi explained yesterday his plans to start a bond-buying program. Additionally, most analysts predict that the ECB will reduce its interest rates.
So why did the European currency decline? One of the probable reasons is profit-taking. Basically, traders know what to expect and what is priced in, so perhaps some of them decided to profit from the recent rally of the euro before other market participants will do so. Moody’s Investor Service reduced its outlook for long-term eurozone bonds from stable to negative, giving another reason to sell the euro.
EUR/USD slumped from 1.2585 to 1.2529 as of 23:52 GMT today, falling from the daily high of 1.2626. EUR/JPY declined from 98.59 to 98.29. EUR/GBP traded at 0.7900, following the jump from 0.7924 to 0.7941.
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