Ahead of European Central Bank, euro edges 0.2% higher. The United States Dollar rally cools off. Thus, the sterling stabilizes. European Central Bank meeting might flag policy easing.
On Thursday, the euro edged higher against a weaker United States dollar. Nevertheless, gains were capped. It was because of the possibility that the European Central Bank might flag more easing in case it deemed inflation and economic recovery at risk from currency appreciation.
United States technology shares bounced. Thus, it suggested an improvement in risk appetite. So, most of the other currencies grounded higher as well. Against a basket of currencies, the greenback had hit a one-month high. There are fears that world markets will head for another downturn.
However, attention centered on the euro and the European Central Bank’s governing council. They will meet later this week, on Thursday. The bank is sure to keep policy unchanged. Nevertheless, President Christine Lagarde’s comments on the recent rice of the euro to two-year highs will be closely monitored.
Euro rose almost six percent against the dollar from June lows.
Analysts at Citi told clients that a dovish emphasis seems likely. Moreover, it perhaps even takes up rate cuts. This is to attempt to stem the rise for the euro and make the scene for the potential easing later this year.
For the first time since 2016, such forecasts grew after data showed euro-area consumer prices turned lower in August.
Also, Lagarde might comment on future inflation strategy.
Recently, the United States Federal Reserve switched its policy. Thus, it implied keeping interest rates lower for longer.
On the day, the euro was up 0.2% to $1.1829. on Wednesday, it received a boost. It happened after Bloomberg News reported that European Central Banks officials grow more confident in the bloc’s economic outlook.
Nevertheless, many reckon that the European Central Bank will struggle to tamp down euro strength.