Euro Dives Amid Growing Easing Expectations

Euro Dives Amid Growing Easing Expectations


The Euro fell against other major currencies ahead of an awaited monetary policy meeting this week. The prospects of additional easing measures by the ECB have increased, especially that the data coming out from the Eurozone are still hinting to weakness in the economic outlook. On Friday, Chancellor Angela Merkel declared that the German economy is in a "difficult phase with slower growth" largely due to uncertainty in global trade. However, the current condition forces them to stimulate the domestic economy. The EURUSD continues to trade in a tight range between a support level of $1.12, and a resistance level of $1.1285.


The dollar index which measures the greenback against a basket of major currencies edged higher towards 97.29. The buck recovered from the losses incurred on Thursday amid rising chances that the Fed will cut interest rates by 50 basis points in the coming monetary policy meeting. The chances of aggressive easing looks stretched, especially that the economic data continue to show the resilience of the US economy. Moreover, investors preferred the dollar to the falling euro, knowing that the Federal Reserve has more room to ease and stimulate the economy more than the European Central Bank. The US 10-year yields hovered near 2.05%, and the USDJPY inched higher to 108.07. 


Precious metals prices erased partial gains as the dollar regained strength. The price of a gold ounce retreated to a low of $1420 after trading at a fresh six-year high of $1452, the price of silver ounce dropped to $16.04, and palladium drifted lower to $1501.


Oil prices edged higher amid escalating geopolitical tensions between the United Kingdom and Iran following the British tanker incident. The recent incidents that are taking place in the Gulf are raising investors' woes over the safety of oil supplies. The West Texas Intermediate crude futures rose to $56.44, and brent futures climbed to $63.58.

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