The euro experienced very negative week even though it has not been expected to be so at the beginning of this week’s trading. Yet comments from European Central Bank President Mario Draghi destroyed any hope for the shared European currency to rally or at least move sideways.
The euro started the week on a relatively strong footing, rising due to positive fundamentals as well as on expectations that the ECB will refrain from monetary easing. The central bank indeed did not change its policy, allowing the currency to rally. Yet the euro quickly lost its gains after Draghi suggested that he will likely add stimulus on the next meeting, making the currency to end the week with losses.
Several other central banks, including the Bank of England, also kept their policies without change. The positive economic indicators in the United Kingdom suggest the BoE may tighten its monetary policy sooner rather than later, leading to the new multi-year record for the pound versus the US dollar.
EUR/USD sank from 1.3881 to 1.3754 after rising to the weekly high of 1.3993. EUR/JPY dropped from 141.78 to 140.04 and EUR/GBP slid from 0.8214 to 0.8162 following the rise to 0.8247 this week.
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