The euro fell close to last week’s trough versus the dollar, while the Australian and New Zealand dollars lost ground on profit-taking as earlier rallies triggered by the Federal Reserve and the European Central Bank’s stimulus moves during the last couple of weeks ran out of steam.
The euro was also held back by continuing uncertainty about Greece and Spain while the Japanese yen was buoyed by the country’s repatriation in the lead up to the end of September’s half-year book-taking. However, the currency’s rise was limited due to cautiousness about the Bank of Japan intervening.
Traders say the euro’s rally since late July which was largely driven by the European Central Bank’s bond purchasing plan and the Federal Reserve’s monetary easing, could be showing signs of coming to an end. Bank of Tokyo-Mitsubishi UFJ currency analyst Teppei Ino said that he feels the rally is drawing to a close and that speculators will now have the opportunity to build fresh short positions instead of going long-term towards the euro.
The single currency went down by 0.3 per cent to $1.2931, not far from last Thursday’s low of $1.29195. It has now dropped by 1.8 per cent since rising to a four-month high of $1.3173 at the beginning of last week.