The euro today declined significantly against the US dollar following dovish comments from a member of the European Central Bank‘s Governing Council. The euro’s decline was further accelerated by the greenback’s recovery following a significant decline in Monday’s trading session.
The EUR/USD currency pair had lost over 80 points to decline from a high of 1.2477 to trade at a low of 1.2391 at the time of writing.
The dovish comments from ECB Governing Council member Erkki Liikanen who stated that the bank should be patient with monetary tightening given the weak Eurozone inflation figures had a negative impact on investor sentiment towards the euro. Hawkish comments from the ECB’s Ewald Nowotny and Vitas Vasiliauskas could not reverse the pair’s downtrend. Weak data releases from the Eurozone such as the EMU M3 money supply print, which expanded by 4.2%, and the German import prices for February released by the Federal Statistical Office, which declined by 0.6%, also increased the selling pressure on the euro.
The Eurozone business climate indicator for March and the services confidence and industrial confidence prints all missed expectations contributing to the pair’s decline. The greenback’s recovery as tracked by the US Dollar Index was also a primary trigger for the decline given that it hit a high of 89.48 earlier today.
The currency pair’s short-term performance is likely to be affected by the release of the US consumer confidence report for March later today.
The EUR/USD currency pair was trading at 1.2399 as at 11:44 GMT having declined from a high of 1.2477. The EUR/JPY currency pair was trading at 131.11 having dropped from a high of 131.81.
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