U.S. dollar rebounded on Thursday while the Euro fell

The U.S. dollar began rising on Thursday, climbing up by almost 0.3% against a basket of currencies. The greenback fell in the last week due to markets’ growing optimism about global economic recovery. Furthermore, the volatile demonstrations in United States cities concerned investors. Despite that, the U.S. currency rebounded in overnight trading.

Riskier currencies, on the other hand, tumbled down from recent highs. The Australian dollar hit a low of $0.6884, plummeting down by 0.5% versus the dollar. New Zealand currency declined as well.

The safe-haven Japanese yen collapsed to new two-month lows. On Thursday, it traded at around 0.1% lower, at 109.06.

Meanwhile, the Euro traded at $1.1202, dropping by 0.3% by the end. The currency fell on Thursday ahead of a European Central Bank meeting. Most of the traders were hoping that the ECB would increase the size of its 750 billion euro ($840 billion) Pandemic Emergency Purchase Programme to help  Europe’s weakest economies.

However, others thought that the European Union’s slow progress in finalizing its recovery fund indicated that the ECB wouldn’t announce more policy easing this month. According to these traders, the ECB may issue an additional stimulus at July’s meeting.

What do experts say?

If combined with the developing recovery fund the implied improvement in the responsiveness of policy is positive – noted Adam Cole, the chief currency strategist at RBC Capital Markets. However, according to him, the direct implications of expanding the size of the PEPP are limited for the Euro.

Thu Lan Nguyen, Commerzbank’s FX and EM analyst, doesn’t agree. She stated that lots of positive economic news could limit any further gains for the Euro. Thu Lan Nguyen also added that the most important question is whether the crisis will leave permanent damage and if it does, then how pronounced it is going to be.

Additionally, the central bank was planning to release its policy decision later on Thursday. ECB President Christine Lagarde held a news conference as well.