The US Dollar was under pressure after speculation on the Fed’s outlook for interest rates deteriorated. The US Dollar Index, which traders use to assess the greenback’s relative weight against major peers, fell to a 2-month trough. That was triggered by softer than expected US economic data coupled with comments from the President of the NY Federal Reserve Branch who put investors on notice that the weakening global outlook needed to be considered in monetary policy.

As reported at 11:33 am (GMT) in London, the EUR/USD was trading at $1.182, a gain of 0.87% and just a few pips from the session high of $1.186; the pair’s daily low came in at $1.107. The USD/JPY was down 0.40% at 117.5765; the Yen is being pushed higher by safe haven demand in an uncertain environment.

ECB Ready to Act

The Euro is also likely to depreciate given the cautionary warning issued by the head of the European Central Bank, Mario Draghi, who had said that the 2% inflation target was still intact and that monetary policy would be altered as necessary to attain that goal. The Euro is often used by traders in carry trade transactions so its weakening tends to be of value to those investors.