Euro Gains Momentum While Dollar Remains Low
By Daisy Joseph
On Wednesday trading, Euro surprisingly picked up momentum after ECB comments while dollar continued to face pressure. The chief of European Central Bank (ECB) commented that the aggressive stimulus policies may be coming to an end. This spiked the interest of the investors and it quickly helped Euro to gain in the market. The US dollar faced the pressure as the US healthcare bill is delayed once again.
The EUR/USD pair was trading at $1.1338 as it gained 1.4% in one day. This is the strongest point for Euro since August 2016. Mario Draghi, president of ECB during a conference in Portugal commented that the reflationary forces will be driving the economy from now on. The deflationary policies will come to an end according to his opinion.
Despite the possible changes in the ECB policies, investors are aware that the changes will be gradual. Monetary support for the currency is still needed in the current economic condition. The inflation rebound also depends largely on the economic conditions globally. This has led Euro on the path of gain in the short term.
The hawkish comments from Draghi have excited the investors because the European rates are expected to climb higher. This also provides more room for Euro to climb in the market. Currently, resistance is expected at $1.4, but the currency is expected to breach this level too.
The US dollar remained low even though US consumer confidence rose unexpectedly in the month of June. The dollar index lost 0.61% and steadied at 96.52.
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