(October 26, 2017) The euro edged higher against the dollar on Thursday ahead of a European Central Bank meeting that could signal the beginning of the end of loose monetary policy, while the dollar eased from recent highs.
EUR/USD was up 0.14% at 1.1827 by 03:17 AM ET (07:17 AM GMT) having recovered from Monday’s two-week low of 1.1724.
The ECB was widely expected to announce plans to begin scaling back its bond buying stimulus program, taking an important step in unwinding years of accommodative monetary policy.
The dollar edged lower against the yen, with USD/JPY dipping 0.08% to 113.65, pulling back from Wednesday’s three-month highs of 114.24.
The dollar has been bolstered in recent sessions by hopes for tax reforms after the Senate approved a budget measure that will allow Republicans to pursue tax cuts without Democratic support.
Demand for the dollar has also been underpinned by speculation over an accelerated pace of interest rate increases if current Federal Reserve Chair Janet Yellen, whose term expires in February, is replaced by a more hawkish candidate.
President Donald Trump has said he is weighing five candidates to lead the Fed, including Yellen, who is perceived by investors as the least hawkish.
Sterling slipped lower against the dollar, with GBP/USD down 0.14% to 1.3245 as investors took profits in the wake of Wednesday’s rally.
The pound ended the previous session up 1% against the greenback after data showing that UK economic growth picked up the third quarter was seen as raising the chances of an interest rate hike by the Bank of England next month.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was little changed for the day at 93.50.