EUR/USD
The euro was trading close to 11-year lows against the dollar on Tuesday as investors anticipated possible monetary easing by the European Central Bank this week. The euro remained under pressure as investors waited to see if the ECB would embark on an outright quantitative easing program at its upcoming meeting on Thursday. In economic news, the euro shrugged off data showing that German economic sentiment rose to its highest level in nearly a year this month. The closely watched ZEW index of German economic sentiment rose for a third month to 48.4 in January from 34.9 in December, ahead of forecasts of 40.0. The report boosted hopes that Germany’s economy, the eurozone’s largest would rebound in 2015 after weakening at the end of last year. Meanwhile, the ZEW survey of eurozone economic sentiment increased to a six-month high of 45.2 from 31.8 in December, beating forecasts of 37.6.
GBP/USD
The pound edged up against the U.S. dollar in quiet trade on Tuesday, pulling away from nearly 18-month lows hit earlier in the session, although gains were expected to remain limited by ongoing support for the safe-haven greenback. The dollar remained broadly supported after the Swiss National Bank shocked markets last Thursday by abandoning its three-year old 1.20 per euro exchange rate cap. Meanwhile, sentiment on the pound remained vulnerable after data last week showed that the annual rate of consumer inflation in the U.K. slowed to 0.5% last month from 1.0% in November.
USD/JPY
The yen held slightly up ahead of the latest Bank of Japan monetary policy review statement due Wednesday. The BoJ is likely to keep monetary policy unchanged as officials continue monitoring the longer-term stimulative effect of falling energy prices. There has been some speculation of fresh easing in the wake of the SNB's decision last week, though most analysts believe this is unlikely.
