MW: Euro dips against dollar, still up for week after Draghi signals end of rate cuts
The euro fell against the dollar Friday, erasing part of its gain from the prior day, which came as European Central Bank President Mario Draghi signaled further rate cuts were unlikely.
The euro EURUSD, -0.8764% was down about 0.8% to $1.1086, but the shared currency still was on track for a weekly advance of 0.8% against the buck. The shared currency popped 1.8% on Thursday as Draghi indicated that the latest rate cut probably would not be followed with further reductions.
The market on Thursday initially showed a warm reception to the ECB’s aggressive fresh stimulus package intended to boost inflation and reinvigorate a stuttering eurozone economy, pulling the euro down to $1.0821.
That reversed, however, after Draghi said the central bank didn’t “anticipate that it will be necessary to reduce rates further,” pushing up the euro to a three-week high of $1.1218. Draghi also said the ECB didn’t introduce a tiered deposit rate because it didn’t want to signal rates would be cut deeper into negative territory.
Read: Here’s why the euro spiked higher after the ECB expanded QE
“Investors are increasingly mindful about the limits of monetary policy after seeing the euro buying,” said Marito Ueda, director at FX Prime byGMO.
The dollar was higher on a broader basis. The ICE U.S. Dollar index DXY, +0.54% — a measure of the buck’s strength against a basket of rival currencies — was up 0.6% to 96.65. That dollar index is still down 0.6% for the week after falling 1% on Thursday as the euro soared.
In other currencies trading, the dollar USDJPY, +0.52% rose 0.5% against the yen, changing hands at ÂĄ113.79.
