Euro Takes a Hit on Stimulus Talk

Euro is heading lower, thanks to the latest talk of stimulus in the eurozone. For weeks Mario Draghi has been preparing traders for the possibility of further easing, but recent comments indicate that looser monetary policy might be imminent. As a result the euro is taking a hit, especially against the greenback.

Yesterday, European Central Bank President Mario Draghi made comments that indicate that interest rates in the eurozone could be cut as early as June. He has been saying for weeks that the inflation picture in the eurozone will be important to any decision made about monetary policy, and some traders and analysts think that a rate cut in June will open the way to an asset purchasing program later.
The news comes as countries in the periphery show improvement. Portugal is getting ready to move out of its bailout, and Standard & Poor’s has upgraded the country’s credit outlook. However, even with this triumph, growth in the eurozone is still slow, and the euro’s strength in recent months isn’t helping matters.
At 13:20 GMT EUR/USD has dropped to 1.3791 from its open at 1.3840. EUR/GBP is higher, though, gaining to 0.8177 from the open at 0.8174. EUR/JPY is down to 140.3950 from the open at 140.6920.

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