The euro today traded slightly lower against the US dollar following comments by some members of the European Central Bank‘s governing council. The dovish comments by Ewald Nowotny and Villeroy triggered a knee-jerk reaction by the EUR/USD currency pair, which headed lower.
The EUR/USD currency pair today declined from a high of 1.1592 to a low of 1.1538 in the mid-European session following the dovish comments.
The release of the German producer price index for May by the Federal Statistical Office early in the European session had a muted impact on the currency pair. The PPI came in at a monthly 0.5% versus the expected 0.4% translating into an annualized 2.7%. Nowotny jawboned the euro by stating that he expects the euro to decline against the US dollar, while Francois Villeroy de Galhau stated that he does not see a rate hike by the ECB until the summer of 2019. The currency pair quickly recovered from the dip following a recovery in German 10-year bund yields given, which had hit a 3-week low yesterday, at the peak of the risk-off sentiment.
The currency pair was still weighed down by the slightly risk-off market sentiment due to the US-China trade spat. Today’s jawboning added to yesterday’s dovish comments by the ECB President Mario Draghi regarding future rate hikes.
The currency pair’s short-term performance is likely to be affected by the headlines from the ECB forum in Portugal featuring Mario Draghi, Jerome Powell, and Haruhiko Kuroda.
The EUR/USD currency pair was trading at 1.1586 as at 12:52 GMT having risen from a low of 1.1538 earlier today. The EUR/JPY currency pair was trading at 127.50 having rallied from a low of 127.09.
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Euro Trades Lower Against US Dollar on Jawboning by ECB Members
