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Forex - Euro hits session lows after ECB’s Constancio’s remarks

Forex Mar 11, 2014 07:15AM ET
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Euro falls to session lows against dollar
 
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Investing.com – The euro fell to session lows against the dollar on Tuesday after European Central Bank Vice President Vitor Constancio said markets had missed some parts of its message on forward guidance last week.

EUR/USD hit 1.3835, the lowest level since March 6 and was last down 0.28% to 1.3837

The pair was likely to find support at 1.3800 and resistance at 1.3877, the session high.

The euro’s losses came after Constancio said the bank made its forward guidance on the existence of slack in the euro zone economy more precise, but this was not picked up by markets.

"The forward guidance was made more precise in relation to the existence of this slack. Unfortunately ... this was not picked up by the markets," he said.

He also said the central bank still had policy options available, including lower interest rates or quantitative easing, if necessary.

The ECB left monetary policy on hold at last Thursday’s meeting, and refrained from implementing any new measures to shore up growth, despite forecasting below target inflation for the next few years.

The euro rallied to two-and-a-half year highs against the dollar on Friday, rising to peaks of 1.3915, as expectations for further easing by the ECB dimmed.

The common currency was also lower against the yen, with EUR/JPY down 0.27% to 142.90. The euro was steady against the pound, with EUR/GBP dipping 0.03% to 0.8333.

Sterling showed little reaction after data on Tuesday showed that U.K. manufacturing output rose more than expected in January, but bad weather hampered the broader measure of industrial output.

Meanwhile, Bank of England Governor Mark Carney said Tuesday there was a range of views among the bank’s monetary policy committee members on the amount of spare capacity in the U.K. economy.

He also said it was not unreasonable to think that interest rates may rise to 2.0% to 2.5% over the next three years. The comments came during testimony on the inflation outlook to parliament's Treasury Select Committee.

Forex - Euro hits session lows after ECB’s Constancio’s remarks
 

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