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Euro slumps to fresh 11-year low ahead of ECB meeting
[NEW YORK] The euro slumped to a new 11-year low against the dollar Wednesday on the eve of a European Central Bank meeting as traders awaited details of its bond-purchase program.
ECB President Mario Draghi is set to unveil Thursday the details of the unprecedented stimulus programme, or quantitative easing (QE), that is due to launch this month.
The euro traded at US$1.1080 late Wednesday, down from US$1.1178 on Tuesday. The shared currency had fallen to US$1.1062, its lowest level since September 9, 2003.
In January, Mr Draghi announced a programme to buy 60 billion euros (US$66.5 billion) of private and public bonds each month until at least September 2016 in a bid to ward off deflation and boost growth in the 19-nation currency bloc.
The ECB's announcement stood in stark contrast to the Federal Reserve's plan to exit crisis support, having ended QE in October and planning to raise near-zero interest rates this year.
"It is the reminder of this divergence that has driven EUR/USD to fresh 11-year lows," said Kathy Lien of BK Asset Management.
"We doubt that the details of the programme will be shocking and view the decline in the euro as a reflection of the reality that quantitative easing is coming," she said.
Joe Manimbo at Western Union Business Solutions said the dollar's latest boost had come in part from rising US Treasury yields which make it more alluring to yield hunters.
"US yields have drifted higher in anticipation that Friday may bring more good news on the American job market which could add thrust to those expecting the Federal Reserve to hike interest rates sooner rather than later," he said.