FOREX-Euro edges off eight-week lows ahead of ECB meeting

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* Euro up zero.2 pct; ECB determination due at 1145 GMT

* Dolllar pauses after current rally

* Sweden’s c.financial institution retains coverage unchanged

* Graphic: World FX charges in 2018 tmsnrt.rs/2egbfVh

By Tommy Wilkes

LONDON, April 26 (Reuters) – The euro edged off eight-week lows on Thursday as merchants readied for a European Central Bank meeting, when buyers can be looking for any alerts about when the financial institution will start unwinding its stimulus.

The single foreign money rose zero.1 % to $1.2168 however stays 2-1/2 cents off ranges hit solely final week, after a bounce in U.S. Treasury yields fired up greenback shopping for and inspired some to query whether or not the euro’s rally since final yr had run out of steam.

The ECB determination is due at 1145 GMT and president Mario Draghi will start his press convention at 1230.

“Draghi is likely to reiterate the need for patience and prudence in the conduct of monetary policy and to avoid addressing the specific timing on the next policy move,” BNP Paribas analysts mentioned, including that such feedback could be unlikely to assist euro/greenback bulls.

“Euro/dollar continues to fall as long positioning gets pared back against a backdrop of negative realized returns and we remain tactically bearish on the pair,” the analysts mentioned.

After a powerful rally into February, the euro has since been caught in a buying and selling vary in opposition to the greenback as buyers pared again expectations of an ECB shifting quickly in the direction of the tip of its financial stimulus programme.

In current days the euro has offered off closely and a fall beneath $1.2154, its March 1 low, would depart it at its weakest since mid-January.

Elsewhere Sweden’s crown, one of the worst performing G10 currencies in 2018, fell after its central financial institution stored rates of interest unchanged and mentioned continued financial assist was wanted given inflation remained weak.

Most buyers are bearish on the crown, believing the Riksbank will stick its ultra-dovish tone even because the ECB acts. The crown fell zero.2 % to 10.43 crowns versus the euro, and it was additionally down zero.2 % in opposition to the greenback .

DOLLAR STRENGTH

With the euro falling, the greenback traded close to a Three-1/2-month excessive in opposition to a basket of currencies, bolstered by the 10-year Treasury benchmark yield breaching the three % threshold for the primary time in 4 years.

The rise in yields was pushed by worries concerning the rising provide of authorities debt and inflationary pressures from rising oil costs.

The current soar in U.S. bond yields has brought about U.S.-Japan and U.S.-German yield differentials to widen additional within the greenback’s favour, leaving the yen and the euro decrease.

“Unless there is a very unlikely massive meltdown in U.S. equity markets, it is doubtful the Fed will waver on a June rate hike,” mentioned Stephen Innes, head of buying and selling in Asia-Pacific for Oanda in Singapore.

“With equity market sentiment holding firm in the face of rising bond yields, the almighty dollar could move through G-10 currency markets like a wrecking ball,” Innes added.

Against the yen, the greenback set a 2-1/2-month excessive of 109.49 yen however later eased to 109.285 yen, down zero.1 %.

The greenback additionally paused in opposition to the Australian and Canadian after current beneficial properties. (Additional reporting by Masayuki Kitano in SINGAPORE, Editing by William Maclean)

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