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Euro Grows, ECB May Signal Inflation Risk

August 6, 2008 at 10:02 by Andriy Moraru

EuroThe euro rose today against the U.S. dollar and other major currencies on Forex after a quite deep decline that was observed yesterday, as the traders expect ECB President Jean-Claude Trichet to signal uprising inflation risks on the next meeting of the Governing Council.

According to the Bloomberg survey of the currency analysts European Central Bank will keep the key interest rate at 4.25 percent at its next meeting, which will be held tomorrow. But the majority of traders expects that the accelerating inflation will be mentioned as the primary concern, thus signaling future rate increases.

The European currency may remain in its long-term uptrend until the speculations about interest rate increases vanish. And as there is a high probability of one or two more rate hikes this year, the currency still has a great potential.

EUR/USD advanced from 1.5450 to 1.5496 as of 7:56 GMT today after losing almost 0.8 percent yesterday. EUR/GBP opened at 0.7910 today and is now trading near 0.7921. EUR/JPY rose from 167.32 to 167.90.

If you have any questions, comments, or opinions regarding the Euro, feel free to post them using the commentary form below.

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