The euro today lost significant ground against the US dollar to test new lows for the third day in a row after yesterday’s dovish outlook from the European Central Bank. The currency pair’s decline was also caused by the stronger US dollar after yesterday’s UK general election, which resulted in a hung parliament, as no party won a majority.
The currency pair lost about 40 points from its peak during today’s session and was on track to close lower than its opening price.
The euro traded lower today after the ECB reversed its inflation outlook lower and announced that it would extend its quantitative easing program into the foreseeable future. The ECB President, Mario Draghi, yesterday stated that even though the Eurozone’s GDP outlook was revised upwards, the bank would not taper its quantitative easing program as the region’s inflation outlook was not at the desired levels.
The EUR/USD pair’s downward spiral was also attributed to the stronger US dollar, which was triggered by the British pound’s major slump against the greenback. The pound’s decline strengthened the US dollar against its main rivals including the euro. James Comey‘s testimony before the senate intelligence committee yesterday did not reveal any unexpected details, which also boosted the greenback.
Given the empty US and European dockets on Monday, the currency pair’s future performance is likely to be affected by political events in the US and in Europe.
The EUR/USD pair was trading at 1.1174 as at 12:38 GMT having dropped from a daily high of 1.1215. The EUR/CAD was trading at 1.5064 having dropped from a high of 1.5157.
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