Euro soared back to $1.18 level as Bloomberg reported that European Central Bank is more confident in economic recovery. This is because European economic forecasts are steady since June. The euro plunged sharply early this week amid concerns over the potential ECB’s interference to halt the common currency rally.
The market investors are now looking towards the ECB policy decision and scheduled press conference from President Christine Lagarde. The reports are indicating that ECB officials are likely to present small changes in future projection for inflation and output. Moreover, gross domestic product projection are likely to be revised higher.
“The risk now is that the euro could lift after the ECB meeting, if that is the case and there is more confidence,” said Commonwealth Bank of Australia currency analyst Kim Mundy, something that would pull other currencies higher on the dollar.
The US dollar, on the other hand, fell from four weeks high that it had hit on Tuesday. The dollar selloff is supported by the stock market rally and the rebound in commodity prices. US stock markets reported hefty gains on Wednesday and extended the momentum into Thursday trading.
“It seems like there is still strong optimism about a eurozone recovery,” said Edward Moya, senior market analyst at OANDA in New York. “It’s going to need more support, but things are not as bad as initially believed.”
US dollar index is currently standing around 93 levels after hitting four weeks high of 93.5 early this week. The greenback is still down significantly from March peak.
British Pound remained weak against the common currency and greenback as UK prime minister threatened to leave Europe without any trade deal. The pound is likely to suffer losses due to concerns over the negotiations on a post-Brexit trade agreement.
“We need to see more realism from the EU about our status as an independent country,” British negotiator David Frost on Monday evening in a statement.