The US dollar declined yesterday and maintained its losses today as investors trimmed bets on monetary easing from the European Central Bank. It is also likely that profit-taking contributed to the greenback’s drop.
The ECB will conduct its monetary policy meeting on the next week, and traders were anticipating additional monetary accommodation after bearish comments from ECB President Mario Draghi at the Jackson Hole Symposium last week. But German Finance Minister Wolfgang Schauble challenged such view, suggesting that the market’s interpretation of Draghi’s words is not necessary true. This statement made market participants to review their strategies that heavily relied on additional stimulus from the ECB. One of such strategies was shorting EUR/USD.
The dollar also fell as traders decided to take profit from the rally that has started basically in July. Additionally, Forex traders were reluctant to buy dollars ahead of a slew of economic reports from the United States on Thursday.
EUR/USD rallied from 1.3168 to 1.3192 yesterday and traded near this level as of 00:43 GMT today. GBP/USD was at about 1.6584 following yesterday’s advance from 1.6539 to 1.6575. USD/JPY sank from 104.05 to 103.87 at the previous trading session and dropped to 103.73 at today’s session.
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