The euro was gradually moving down for the most part of the week ahead of the next week’s monetary policy meeting of the European Central Bank. The currency sharply reversed its movement by the end of the week after the inflation report, which was received favorably by Forex market participants.
The ECB is going to conduct a policy meeting next week and traders were worried that the central bank will add monetary stimulus to bolster the struggling recovery. Fear of deflation was among most significant concerns. Yet Friday’s inflation report showed that consumer prices were rising with stable pace, dispelling fears and allowing the euro to jump.
The euro still ended the week with small loss against the pound, meaning that the forecast of weaker sterling was wrong. The Swiss franc strongly outperformed the shared European currency as the market sentiment favored safer currencies.
EUR/USD rallied from 1.3733 to 1.3802 this week following the drop to 1.3642. EUR/JPY dipped from 140.72 to 138.78, but bounced by the weekend and closed at 140.47. EUR/GBP was down from 0.8256 to 0.8189 before closing at 0.8242. EUR/CHF declined from 1.2183 to 1.2137.
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