Slack US dollar supports euro recovery

Posted 22 January, 2018

The European currency rebounds on Monday. The positive euro performance is related to anticipations that the European Central Bank will not change monetary policy after this-week meeting.

Specifically, the euro rate has gained 0.2% to $1.2249 today, coming to a 3-year top of $1.2323.

In this situation, some large investors revised euro outlook upwards seeing sluggish US dollar affected by US government shutdown and higher-pace economic growth in Europe, as market experts reported.

US government stopped working on Saturday after the officials (in particular, the Democrats and Republicans) failed to agree on an extension of funding due to the dispute concerning the immigration and border protection. The talks between the representatives of the parties in the Senate was cancelled on Sunday and the voting concerning the resolution of provisional funding of the government till February 8 is expected today.

Insiders focus on the monetary decisions in Japan and Europe. The Bank of Japan is unlikely to announce changes to their monetary policy after upcoming meeting, while the European Central Bank may stick its soft policy giving no signs of the policy revision.

In the course of the day, the US Dollar index (US dollar capacity vs six majors) dropped to 90.485, though stayed above the 3-year low at 90.113.

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