Euro gains before ECB meeting; Biden stimulus weighs on dollar

The euro ticked higher before a meeting of the European Central Bank on Thursday, with the dollar declining versus major peers as plans for a massive U.S. stimulus package fuelled market optimism and sapped demand for safe-haven currencies. Stock markets reached record highs on Wall Street and in Asia following the inauguration of Joe Biden, amid hopes the 46th president of the United States would secure a $1.9 trillion package to prop up the COVID-19 hit economy.

The dollar index slipped 0.2% to 90.240, declining for a third day after touching a nearly one-month high of 90.956 on Monday. The euro gained 0.2%, reversing a similar decline from the previous session, to trade at $1.2134 about four hours before the ECB’s policy announcement at 1245 GMT.

Many analysts expect the dollar to continue its downtrend trend, which saw it lose nearly 7% in 2020 amid ultra-loose U.S. monetary policy and hopes for a post-pandemic global recovery.

The dollar also lost 0.1% at 103.505 yen on Thursday, after dipping to a two-week low of 103.33. The Bank of Japan kept monetary policy unchanged on Thursday while revising up its economic forecast for next fiscal year. Norway’s central bank left its key policy interest rate at a record-low zero percent on Thursday, as expected, and said the economy was developing largely as anticipated.

Euro gains before ECB meeting; Biden stimulus weighs on dollar, Reuters, Jan 21