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U.S. dollar climbed up on Thursday. What about Euro? 

 The dollar continued gained against the most major currencies on Thursday. Investors’ concerns about excessive valuations triggered a stock market rout and simultaneously increased safe-harbour demand for the greenback.

 

Meanwhile, the Euro tumbled down after a European Central Bank member stated that interest rate cuts are possible to lessen the common currency’s recent gains.

 

The riskier Australian and New Zealand dollars also plummeted down against the U.S. currency in a sign of fading market confidence.

 

On the other hand, the dollar soared to 104.27 yen after gaining 0.4% on Wednesday. Against the Euro, the greenback traded at $1.2094, nearing its one-week high point.

 

On Thursday, the British pound declined for a second consecutive session to $1.3673. However, the dollar index sat at 90.742.

 

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How did the currencies fare during the last session? 

 

The Euro declined on Wednesday as well. ECB governing council member Klaas Knot announced that the central bank could cut its deposit rate further if it becomes necessary to reach its inflation target and improve financing conditions.

 

Thus far, Knot’s comment is the most apparent hint from an ECB policymaker about the real possibility of a rate cut to stop a rally in the common currency. Until recently, that move seemed highly unlikely.

 

Since March last year, the Euro has skyrocketed by almost 15% against a greenback that most analysts expect to drop further. On Wednesday, the Euro traded lower by 0.3% at $1.2120.

 

On Tuesday, analysts noted that the ECB was studying whether differences with the Federal Reserve’s policy in the U.S. were bolstering the Euro.

 

Jordan Rochester, the FX strategist at Nomura, said it’s likely one of those headlines where it’s a buy on the dip moment in euro/dollar. However, his target remains at $1.25 by the end of March. G10 FX strategist at BBVA Alexandre Dolci has a similar outlook. He stated that they continue to favour buying euro/dollar on dips despite the heavy positioning as they expect the pair to steady in a $1.20-$1.25 range.

 

On Wednesday, the greenback reversed early declines in Asia, trading up 0.3% at 90.393 while markets waited for Fed Chair Jerome Powell’s comments.

 

Earlier this month, Powell already declared that the U.S. economy is still far from the agency’s inflation and employment goals. He added that it was too early to discuss altering monthly bond purchases.

 

John Velis, the FX and macro strategist at BNY Mellon, noted that thus far the agency remains consistent. However, the balance of risks are still to the downside.

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