- POSTED: 13 May 2014 05:47
The dollar was stable against the euro on Monday, holding last week's gains after European Central Bank chief Mario Draghi said the ECB was ready to ease monetary policy soon.
NEW YORK: The dollar was stable against the euro on Monday, holding last week's gains after European Central Bank chief Mario Draghi said the ECB was ready to ease monetary policy soon.
Analysts said that investors were still digesting Draghi's remarks, after a policy meeting on Thursday, that the ECB was sufficiently concerned about the eurozone's low inflation to take action next month.
By late Friday in New York, his comments had sent the dollar up about two cents, to US$1.3758 per euro.
Christopher Vecchio at Daily FX said the ECB had painted itself into a corner.
"The problem with planting a flag for action one month from now is that if the ECB does not do anything, it stands to lose a fair amount of credibility," Vecchio said.
"The likelihood that the euro would rally sharply in the wake of inaction once more seems like a fairly high probability in light of recent history. Implicitly, the ECB now has no choice but to act."
Joe Manimbo at Western Union Business Solutions said the dollar has been undermined by mixed economic data and cautious remarks from Federal Reserve Chair Janet Yellen that suggest the US economy is still not strong enough for an increase in the federal funds rate held near zero for more than five years.
"US data due Tuesday on retail sales, and inflation and jobs data due Thursday, can shed light on underlying greenback sentiment," he said.