Investing.com – The euro gained ground on Thursday, building on the previous day’s gains after hawkish European Central Bank comments fueled expectations that it will soon start scaling back its monetary stimulus program.
EUR/USD was up 0.47% to 1.1829 by 04:03 AM ET (08:03 AM GMT), the highest level since May 22. The euro has risen around 1.47% against the dollar so far this week.
The single currency was boosted after ECB Chief Economist Peter Praet said Wednesday that officials are increasingly confident that inflation is rising back towards the bank’s target and will next week debate whether to begin gradually scaling back its asset purchase program.
The remarks fueled speculation that the ECB’s June meeting could see an announcement on when its massive bond purchase program would end.
Many traders had believed the bank would hold off on giving any new forward guidance at its meeting this month amid uncertainty caused by political developments in Italy.
The euro rose to two-and-a-half week highs against the yen, with EUR/JPY rising 0.25% to 130.06.
The dollar was lower against the yen, with USD/JPY losing 0.25% to trade at 109.89, pulling away from Wednesday’s two-week highs of 110.26 as investors took profits.
Demand for the dollar continued to be underpinned by expectations for a rate hike by the Federal Reserve at its upcoming meeting next Wednesday.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.38% to 93.25 as the stronger euro weighed.
The pound rose to more than two-week highs, with GBP/USD up 0.37% to 1.3465.
Sterling remained supported after services data earlier in the week indicated that the British economy is showing signs of recovering from its recent slowdown, reviving expectations that the Bank of England might raise interest rates in August.
Investors were continuing to monitor developments related to heightened trade tensions, given that U.S. President Donald Trump looks set to clash with other Group of Seven leaders at a weekend summit in Canada.