European Central Bank President Mario Draghi took a swipe at the USA administration, saying the euro's recent rise was partly the result of comments that contradicted an agreement not to talk currencies up or down.
A stronger euro makes it more hard for eurozone nations to sell their products and services overseas. Finally, we do not expect any major change to forward guidance this week apart from the removal of the asymmetry in QE, which we do not think would be consequential.
He added that it would therefore require monitoring.
North of the border, the Bank of Canada kicked off 2018 by hiking interest rates, buoyed by robust job growth and having raised rates twice back-to-back a year ago, even as uncertainty around the fate of the North American Free Trade Agreement lingers.
As widely expected, the ECB kept interest rates and guidance unchanged at its policy meeting, with investors focusing on comments from ECB President Mario Draghi in a subsequent press conference.
Weaker odds of the European Central Bank winding down its long-running quantitative easing program before the end of the year could weigh heavily on the EUR/USD exchange rate.
This has driven the euro to three-year highs against the dollar.
Policy makers reiterated that they'll continue buying 30 billion euros ($37 billion) of assets a month until at least the end of September.
The yield on 10-year German government bonds, the benchmark for the bloc, hit a six-month high at 0.579 percent following Draghi's remarks.
The ECB is expected to hold its main refi rate at a record low zero percent and the deposit rate at -0.40 percent.
Robust quarterly earnings reports and economic data have helped propel major Wall Street indexes to a strong start this year, with each on track for a fourth week of gains.
Some market participants are also concerned that Trump may encourage more protectionist policies at a speech in Davos around 1300 GMT and at his State of the Union speech next week, policies that may ultimately end up pushing the dollar lower.
With no change in policy expected at this juncture any attempt to talk down the prospect of an imminent return to monetary tightening is likely to leave the Euro lacking in support.
But predictions for tighter European Central Bank policy are adding to pressure on the currency and raising market bets for a rate hike as early as December, a move seen as premature even by the most hawkish of policymakers.
The Bank of Japan is also forecast to keep its long-term interest rate target unchanged this year, though 40 percent of economists polled by Reuters expect a hike as Japan's economy continues to strengthen. Capital has fled the greenback onbets that rosy global growth willsee more central banks follow the Fed's hawkish lead, making alternatives seem relatively cheap (and thereby attractive).
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