Following last week’s heavy selloff, the Euro managed to hold onto recent gains during the Asian trading session though investors continue to curtail their bearish positions. Cited as the reason for the new selloff was the absence of any fresh data that could have supported the common currency, as such market players decided to book their profits. At last week’s ECB policy meeting, the central bank’s benchmark lending rates were lowered which caught markets by surprise, however it was recently learned that some members of the bank’s governing council did not support a rate cut and despite Mario Draghi’s hints to the contrary could be a stumbling block to further rate reductions.
As reported at 10:10 a.m. (JST) in Tokyo, the EUR/USD was trading at $1.3405, moving well away from last Thursday’s 2-month low of $1.3295; the pair has lost about 3% from October’s 2-year high of $1.833. The EUR/JPY traded at 132.89 Japanese Yen, up from last week’s trough of 131.22 Yen, effectively wiping out nearly all of the losses racked up after the rate cut announcement.
Analysts’ Euro Outlook
Given the newfound knowledge that the ECB decision wasn’t unanimous, analysts are suggesting that the recent bounce in the common currency could be a good opportunity to short the Euro against its main rivals, the U.S. Dollar and the Pound Sterling. Many analysts believe that the divergence in policy between the U.S. and the Eurozone are likely to keep the momentum for the EUR/USD pair in a downward trend.