Euro rose in European trade on Monday against a basket of major rivals, extending its recovery for the second day off five-week lows against the dollar ahead of the ECB meeting later this week.
Following recent bullish remarks by ECB policymakers, markets now rule out an early ECB interest rate cut in the first quarter of this year.
Dollar lost ground as well as US treasury yields tapered off, with traders awaiting more clues on the likely path ahead for Fed interest rates.
EUR/USD
EUR/USD rose 0.2% to 1.0909 with a session-low at 1.0886, after rising 0.2% on Friday, the second profit in three days away from five-week-lows at $1.0844.
As for last week, the pain lost 0.5%, the second weekly loss in three weeks as concerns grew again about the US-Euro zone interest rate gap.
ECB
The European Central Bank is meeting this week to discuss policies and economic developments, expected to maintain interest rates flat for the third meeting in a row.
Several ECB officials opposed the idea of early interest rate cuts starting next May as inflation and wages continue to present risks.
ECB President Christine Lagarde said at the Davos Economic Forum that euro zone interest rates could be cut in the summer and not spring.
Dr Joachim Nagel, President of the Deutsche Bundesbank, Member of the Governing Council of the European Central Bank, said it's still too early to talk about rate cuts as inflation remains too high.
Robert Holzmann, Governor of Austria's Central Bank, said that Middle East geopolitical tensions and shipping disruptions in the Red Sea constitute a big inflation threat.
The Dollar
The dollar index fell over 0.1% on Monday, extending losses for another session and moving off five-week highs at 103.69 against a basket of major rivals.
US treasury yields declined for another session ahead of more important data this week, which will provide fresh pricing for the likelihood of early Fed rate cuts at the March meeting.
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
