Euro hovers above two-decade low ahead of ECB decision

On Thursday, the euro hovered above the 20-year low hit two days ago as investors awaited the European Central Bank’s policy decision and comments from the Federal Reserve chief for indications on the path of global monetary tightening.

The European Central Bank is expected to raise interest rates by 75 basis points, bringing the deposit rate above zero for the first time since 2012, but the option of raising interest rates by 50 basis points has not been ruled out.

By 0747 GMT, the euro was trading down 0.3 percent at $0.99795, consolidating above the lowest level since late 2002 at $0.9864, as the energy crisis in Europe keeps the single currency under pressure, while the dollar is strengthening with the Federal Reserve repeating its commitment to reduce inflation to the rate target.

US Central Bank President Jerome Powell is scheduled to participate in a discussion at 1310 GMT while European Central Bank President Christine Lagarde will hold a news conference after the decision.

In general, Federal Reserve officials have been hawkish lately.

The dollar index, which measures its performance against six major currencies, rose 0.1 percent to 109.82 points, after hitting a peak at 110.79 on Wednesday, a level not seen since June 2002.

The pound fell 0.4 percent to $1.1486, heading back towards a 37-year low recorded the previous day at $1.1407, just before the new British Prime Minister Liz Terrace announced her plans to deal with rising energy bills.

The Japanese yen was little changed on Thursday, trading at 143.77 to the dollar, after hitting a 24-year low of 144.99 in the previous session.

Meanwhile, the Australian dollar fell 0.5 percent to $0.67345, and earlier recorded $0.6713.