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Euro falls ahead of this week's ECB meeting

The euro fell on Monday (August 4) against the dollar and the Japanese yen, ahead of a European Central Bank meeting later this week.

NEW YORK: The euro fell on Monday (August 4) against the dollar and the Japanese yen, ahead of a European Central Bank meeting later this week. The ECB meeting on Thursday comes amid continued concerns at the low level of inflation in the eurozone.

Christopher Vecchio, currency analyst at DailyFX, predicted a cautious tone about eurozone economic conditions in spite of some improving data. "Soft inflation expectations are dogging the euro in the near-term," he said.

ECB likely will not announce new stimulus measures, but fresh statements suggesting the need soon for such measures could drive the currency lower, he said. "The ECB meeting this week, then, absent of any real action, will at least bring along with it a rather dovish slant from Governor Mario Draghi at the post-meeting press conference," Vecchio said.

Kathy Lien, managing director at BK Asset Management, said ECB chief Draghi and other policy makers will "maintain a dovish bias and continue to talk about the need for additional stimulus."

Draghi could also touch on the eurozone's banking troubles after Portugal enacted a 5.0 billion euro rescue package for Banco Espirito Santo, Lien said. "Investors are not convinced that this will be the end of Europe's banking troubles," she wrote.