For the third consecutive day, the common currency Euro has pushed higher versus its main rival, the US Dollar, on growing worries over the future of the US economy. First quarter growth surprised to the downside with a lower than expected reading, while the Federal Reserve Bank hinted that an interest rate hike in the near future was not currently on the FOMC table. By all accounts, analysts had high expectations over the past year, expectations that saw the Fed bringing the low interest rate environment to an end; however, the recognition is that the US economy, like its global counterparts, is still struggling to find its footing.
As reported at 9:33 am (BDT) in London, the EUR/USD had earlier traded at a 2-month peak at $1.1255 before edging back to the current $1.1169; since mid-April the Euro has gained nearly 6% on the greenback. Some analysts are forecasting a dollar correction in the near term, with the EUR/USD perhaps trading even at the $1.15 level.
BOJ Holds Off on Easing
As expected, the Bank of Japan announced that it would maintain its current policy and would not be providing any additional stimulus for the time being. According to the Bank of Japan forecasts, inflation is on the verge of rising, thus their policy was to remain unchanged. On the news, the Japanese Yen, which had lost nearly 20% of its value over the past 24-months, rose to a 1-month high. The USD/JPY was trading at 118.8625 Yen, a loss of 0.23%, midway in the day’s trading band of 118.5005 Yen at the low and 119.1040 Yen at the high end.