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EUR Gains Before ECB Meeting; Biden stimulus weighs on USD

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The euro ticked higher before a meeting of the European Central Bank on Thursday, with the dollar declining versus major peers as plans for a massive U.S. stimulus package fuelled market optimism and sapped demand for safehaven currencies.

Stock markets reached record highs on Wall Street and in Asia following the inauguration of Joe Biden, amid hopes the 46th president of the United States would secure a 1.9 trillion package to prop up the COVID19 hit economy.

The dollar index slipped 0.2 to 90.240, declining for a third day after touching a nearly onemonth high of 90.956 on Monday.

The euro gained 0.2, reversing a similar decline from the previous session, to trade at 1.2134 about four hours before the ECBs policy announcement at 1245 GMT.

We dont expect many fireworks from the European Central Bank meeting, ING strategists said, foreseeing a fairly uneventful day for the euro.

Many analysts expect the dollar to continue its downtrend trend, which saw it lose nearly 7 in 2020 amid ultraloose U.S. monetary policy and hopes for a postpandemic global recovery.

While the idiosyncratic euro story remains unexciting the eurozone will not outperform the U.S. economy this year and any ECB policy normalisation is a very distant story, we expect the bearish dollar dynamics to dominate, the ING strategists said.

The dollar also lost 0.1 at 103.505 yen on Thursday, after dipping to a twoweek low of 103.33.

The Bank of Japan kept monetary policy unchanged on Thursday…

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