Monday, 4 Apr 2011

Euro Eases after Reaching 11-Month High versus Yen

The euro slid from an 11-month high against the Japanese yen and a five-month high against the U.S. dollar as expectations for the European Central Bank (ECB) to increase interest rates are fully priced in.

The ECB is expected to hike rates on Thursday by 0.25 percent from a record low of 1.00 percent, in the attempt to fight inflationary pressures in the euro zone. If the ECB will in fact raise interest rates, it will be the first time such a move takes place in nearly three years.

Currently, the EUR/USD is trading near the 1.4210 level, down 50 pips from a five-month high. Against the yen, the euro fell about 50 pips from an 11-month high and the EUR/JPY pair is now trading near the 119.50 level.

Turning to the rest of the day, a speech from Fed Chairman Bernanke is likely to inject some volatility into the market. A hawkish speech from Bernanke may help the dollar to see further gains against the euro and against its other rivals.