* Graphic: the World of exchange rates by 2019 http://tmsnrt.rs/2egbfVh (Adds comment, graphic, updates prices)
By Elizabeth Howcroft
LONDON, June 4 (Reuters) – The dollar firmed on Thursday, reversing its weakening trend of the past seven days, while the euro slipped ahead of a European Central Bank meeting at which policymakers could increase stimulus measures.
The ECB should increase the size of its 750 billion euro ($840 billion) against the Pandemic Emergency Purchase Program (PEPP) to support the weaker economies of Europe, although some investors think that this will be the case to July’s meeting rather than today.
The euro has gained around 3.6% against the dollar since France and Germany have proposed an EU-wide recovery fund to share the costs of the corona virus of the crisis, on May 18.
But Thursday, he changed course, falling 0.3% to $ 1.1202 by 1025 GMT.
Kenneth Broux, FX strategist at Societie General, who said that it was to consolidate recent gains, as the market waits to see the outcome of the ECB meeting.
“The euro-dollar has been overbought, technically, so there’s a good reason to take a little bit of profit. This does not mean that we can’t go over the top in the next week or two weeks,” he said.
Broux said, there is the potential for a market disappointment today as the market expects the ECB to increase the PEPP program. If they don’t, the euro could reverse back to 1.07 against the Swiss franc and the euro-dollar could fall below version 1.12, this afternoon, ” he said.
An argument against the ECB announcing more policy easing on Thursday was the slow progress of the European Union to finalize its recovery to fund the project. The ECB could take in order to maintain pressure on european political leaders.
“For the EUR, the direct implications of the increase in the size of the PEPP are limited, but combined with the development of the recovery fund, and the implicit to the improvement of the responsiveness of the policy has been positive,” said Adam Cole, chief currency strategist, RBC Capital Markets.
But Commerzbank FX-and-EM-business analyst Thu Lan Nguyen said that all the other gains of the euro could be limited by a large amount of positive news is already priced in by the investors.
“The most important question remains and that is whether the crisis will leave a permanent damage and if so, how pronounced this is going to be,” she said.
The central bank delivers its decision at 11: 45 GMT and the ECB President, Christine Lagarde, holds a press conference at 12: 30 GMT.
The dollar rose around 0.2% against a basket of currencies, which had weakened last week, as global markets grew more optimistic about an economic recovery. The U. s. currency has begun to strengthen in overnight trading and resumed more dramatically, between 0600 UTC and 0840 UTC, and then began to decrease again.
The refuge Japanese yen has fallen to a new two-month lows versus the U. S. dollar, which is 109.165 around 0830 registration GMT. .
Riskier currencies declined from recent peaks. The Australian dollar declined 0.3%, to $0.6899, after having hit a low of $0.6882.
Australian retail sales suffered a historic plunge in April, while the trade surplus has narrowed as the feline corona virus hit the economy, leaving the nation facing its worst contraction in the current quarter.
The Norwegian krone has declined slightly, falling from a recent three-month highs against the dollar and the euro .
The analysts of Goldman Sachs recommended in a note to clients that investors go short on USD/NOK.
“The motto of the sacrifices attractive exposure to a number of cyclical factors that seem likely to turn headwind to tailwind, such as the rise in oil prices and the improved growth in Europe,” they wrote.
OPEC+ oil, the producers could still virtual the ministerial meeting this week, if Iraq and others who have not fully complied with the current oil supply cuts is agree-to-boost-their membership of a failure, the three OPEC countries+ the sources have told Reuters.
(Reporting by Elizabeth Howcroft; Editing by Toby Chopra)