Euro beats dollar as it was lifted by expectations that ECB will start its policy shifts

Dollar beats euro

The U.S. dollar was outperformed by a much stronger euro on Thursday. Investors are turning their attention to the possible hints of a monetary policy tightening from the ECB. The Japanese yen also surpassed the greenback after the policy meeting from the Bank of Japan.

The euro slightly backed off from its $1.1583 last Tuesday and it is now at $1.15275. This is considered as the common currency’s best level since May 2016 but still preserved its highs as much as 3 percent since the address of ECB President Mario Draghi. However several participants of the market suggested a possibility that the euro would endure a setback considering that investors have established immense positions in the common currency.

The European Central Bank is already forecasted to create foundation for a policy shift this autumn on its Thursday meeting. It gave emphasis to growth improvements while extending efforts to temper projections after settling off a small tantrum in financial markets lately. Draghi unlocked the possibilities to policy tweaks in his address in Sintra, Portugal last June. These ignited speculations that the bank is equipped to announce an asset purchasing program reduction.

The euro, however, traded close to the flat line versus the Japanese yen, it was pulled down from the 17-month peak on the previous week of 130.76. The Bank of Japan is forecasted to hold its policies at its conference on the day. The Japanese currency was also strong against the dollar due to the sluggishness of the greenback on inflation news.

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