The Euro was trading at a seven-week high against the US Dollar on Wednesday as investors looked ahead to Thursday’s European Central Bank policy meeting.
Earlier in the session the Euro peaked at a nine-week high before softening slightly as concerns over the situation in Ukraine and disappointing data out of France and Germany weighed.
The main focus for investors however is Thursday’s ECB policy meeting in which it is expected to resist the urge to introduce new monetary stimulus measures. The policy makers are also expected to maintain the region’s interest rates at the record low level of 0.25%.
Economists will be interested to see how the ECB deals with the stubbornly high Euro. ECB President Mario Draghi recently said that he would introduce asset purchasing if the high Euro continued to keep inflation in the Eurozone down.
“The main problem for the ECB is if they don’t do anything. Then I would think we’d break the highs of the year, which will mean more pressure from them later on. If we do go above $1.40 it would create a lot of headlines that they could do without,” said a currency strategist at UBS in a phone interview with Bloomberg.
The Euro remained higher despite the release of data earlier in the session which showed that German factory orders slumped by 2.8% in February from a year earlier, confounding expectations for a 0.3% increase. French industrial production also came in below economist forecasts.
A separate report out of the Republic of Ireland showed that industrial production soared by 10.2% on a yearly basis in March adding to signs that a recovery is under way in the country.
The US Dollar is under pressure ahead of US Federal Reserve Chairman Janet Yellens speech to the US Congress. Ms Yellen is expected to say that interest rates will remain on hold despite last week’s better-than-forecast nonfarm payrolls data.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3928 ,
Euro,,British Pound,0.8210 ,
Euro,,Australian Dollar,1.4926 ,
Euro,,Canadian Dollar,1.5173 ,