The dollar rose against the euro early Thursday in New York after the European Central Bank left its key lending rate unchanged and signaled plans for a June rate hike, as expected.
After the ECB said it was leaving its official rate at 3.75% early Thursday, the bank's president, Jean Claude Trichet, told reporters that the bank would use "strong vigilance" in its efforts to ward off inflation. This has become a catchphrase of Trichet's to signal the bank will hike rates in the following month.
His remarks immediately gave the euro a knee-jerk boost, but it quickly shed those gains and the euro then moved weaker against the dollar.
Brian Dolan, head of currency research at Forex.com, said overall sentiment has been dollar-positive during the past week, and since the ECB's actions were already priced in, they were unable to give the euro sustained support.
"The euro's losses would have been even worse if Trichet hadn't signaled the June hike," Dolan said.
Early in New York Thursday, the euro was trading at $1.3508 from $1.3526 late Wednesday, while the dollar was at Y120.51 from Y120.05, according to EBS. The euro was at Y162.80 from Y162.38 late Wednesday. The dollar was at CHF1.2202 from CHF1.2185, while the U.K. pound gained against the dollar at $1.9836 from $1.9938 late Wednesday.
Source : Forex.com
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