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ECB Speculation has EUR/USD down at 1.36

The euro was set for its biggest monthly drop in a year against nine major peers amid speculation the European Central Bank will expand easing next week.

The shared currency traded near a three-month low against the yen before a report next week forecast to show inflation in the euro area remained below 1 percent, less than half the ECB’s goal. President Mario Draghi said this month he’s “comfortable” to act in June. Australia’s dollar touched a one-week high ahead of a report that may show an expansion in China’s manufacturing industry.

“We could see a large selloff in the euro if the ECB acts aggressively,” said Yuki Sakasai, a currency strategist in New York at Barclays Plc. “A rate cut is already priced in and some people are also expecting liquidity measures, so the focus would be on whether they will deliver more.”

Bloomberg [1]

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