Euro Near Weekly Lows before Rate Decision

The euro declined today against the U.S. dollar, almost snapping the yesterday’s gain, as the traders expect the weak data on the Eurozone retail sales after PMI shrank in the leading Eurozone economies.

The European currency came close to the lowest level in the last two weeks against the dollar and the lowest in the month against the yen. As the macroeconomic indicators show the worsening of the situation in the Eurozone’s economy, the traders expect that the European Central Bank will reduce the interest rate from 3.25 to 2.75 percent at its next meeting tomorrow.

The British pound follows the euro’s behavior and is advancing its weekly lows against the dollar and yearly bottom against the yen. The fundamental data from the United Kingdom make the market participant to think that tomorrow the Bank of England will cut the interest rate from 3 percent to 2 percent.

The poor economic outlook from both Great Britain and the Eurozone suggest that the rate cuts are necessary. Lower rates will continue to press on their currencies, analytics say. Even after these monetary policy meetings the rate reductions series may not be over yet.

EUR/USD fell from 1.2726 to 1.2614 as of 9:37 GMT today. EUR/JPY declined from 118.48 to 117.36, while GBP/JPY went down from 138.95 to 136.61 and renewed its more than a decade minimum. GBP/USD fell from 1.4919 to 1.4681 today.