EUR/USD down to 1.3510 before ECB Meets

The euro retreated from an eight-month high versus the dollar before the European Central Bank meets today for the first time since President Mario Draghi said he’s ready to inject cash into the banking system.

The U.S. currency halted losses against major peers before a private report forecast to show companies in the U.S. added jobs at a faster pace last month. U.S. lawmakers still need to agree on raising the debt limit to avoid a default after Oct. 17, following the government’s first partial shutdown in 17 years yesterday. Italian Prime Minister Enrico Letta poised to face a confidence vote today in parliament.

“In recent speeches, some ECB board members were concerned about the low level of excess liquidity,” said Joseph Capurso, a Sydney-based currency strategist at Commonwealth Bank of Australia (CBA), the nation’s biggest lender. Indications of another long-term refinancing operation “would be seen as putting downward pressure on European market interest rates and would put downward pressure on the euro.”


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