The euro strengthened against the dollar over the weekend following last week’s G20 meeting and the decision by the ECB to cut interest rates by 0.25% rather than the anticipated 0.5% cut. ECB President Jean-Claude Trichet stated that the central bank could lower interest rates further, possibly at their next meeting, thus allowing them more room to act, as opposed to the Bank of England and Federal Reserve who have already cut their interest rates to near zero. This announcement resulted in a renewed appetite for riskier currencies, which undermined the dollar.
Many analysts are expecting a positive week for the euro, with some predicting it could hit the $1.30 mark. However, if any grim economic data is released this week it could result in investors flocking to the safe haven of the dollar and subsequently weakening of the euro.
There are several announcements taking place in the eurozone today, including Producer Price Index and Retail Sales. There are no significant announcements taking place in the US today.
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