The euro had a slight rise against the dollar after the European Central Bank cut its benchmark interest rate to 1 percent, a record low for the European economic bloc.
The speculations that the ECB would cut its rates were confirmed today after the European policy makers set the interest rate to 1 percentin the Eurozone, an effort to avoid the current severe recession to deepen. After the ECB statement, traders are focusing to watch Jean-Claude Trichet’s declarations on what kind of measures will be taken to ease the economic crisis in the region. The euro posted gains against the dollar and the yen, as risk appetite grows, but also against the pound, which was previously rallying against the European common currency.
Analysts are expecting the euro to strengthen if unconventional measures from the ECB will be taken in order to revive the bloc’s economy. It is highly possible that quantitative easing will be considered in the Eurozone, and as some ECB council members have stated, the central bank is likely to buy debt to increase the amount of money in the economy. Even if the euro is likely to strengthen, a certain amount of unpredictability surrounds the future of the euro currency pairs.
The EUR/USD currency pair traded at 1.3348 rising from 1.3305 in the intraday comparison. EUR/GBP remained stable fro yesterday’s price, as it reversed a downtrend after the ECB rate cuts.
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