By: DailyForex.com
The common currency Euro struggled broadly during the Asian trading session following comments made by the president of the European Central Bank, Mario Draghi, who once again stressed that the bank was poised to make further cuts to interest rates if new incoming data suggested that there was a need. Last week, Draghi said that new and more drastic measures, which could include negative deposit rates, were under consideration. Currency strategists have said that given that there is continued support, the Euro’s downside risks are likely to be contained.
As reported at 10:36 a.m. (JST) in Tokyo, the EUR/USD pair had been trading at a session low of $1.3053, well below Monday’s peak of $1.3141; it has since recovered and is holding at $1.3081. The Euro also gave up some earlier gains against the safe haven Japanese Yen, trading at 129.61 and moving away from Monday’s high of 130.40 though the 3-year peak which was hit in April remains within striking distance.
Ahead of an interest rate decision from the Reserve Bank of Australia, the AUD/USD had traded lower at $1.0253, a loss of 0.6%. Though consensus opinion had called for the RBA to hold monetary policy unchanged, market players had priced in a 50-50 chance for a 0.25% rate cut and this time around market players won the coin toss. Glenn Stevens, the head of the RBA announced earlier that it was cutting its cash rate to 2.75% from 3.0%, citing that the timing was appropriate in order to encourage sustainable economic growth.