Euro lower against the US dollar ahead of ECB decision

The euro traded lower against the US dollar on Thursday in expectation of European Central Banks monthly meeting later today and as a result of political crisis in Portugal, which was still causing influence on the pair.

EUR/USD slid to a session low at 1.2987 at 4:15 GMT, after which consolidation followed at 1.2994. Support was expected at July 3rd low, 1.2922, while resistance was likely to be met at July 2nd high, 1.3077.

The European Central Bank is expected not to introduce changes in the base interest rate (currently at 0.50%) and to reiterate that an exit from the current loose monetary policy remains distant. At 12:30 GMT ECB President Mario Draghi is expected to take a statement on monetary policy at the regular press conference of the bank. Usually, high volatility is present during his speech.

On the other hand, fears over political instability in Portugal continued to cause influence on market sentiment, as both the countrys minister of foreign affairs and finance minister resigned in protest over government austerity measures.

Meanwhile, investors attention was on Fridays non-farm payrolls report from the United States, because it could provide clues on whether a reduction of scale of stimulus by the Federal Reserve was at hand. On Wednesday payroll processor ADP reported that US private sector added 188 000 more jobs in June. Experts had projected an increase to 160 000 job positions, while in May economy added 134 000 jobs. Additionally, the number of people, who filed for unemployment assistance decreased in the week, ended on 28.06.2013, by 5 000 to 343 000. During the preceding week this indicator was revised up to 348 000 from 346 000 previously. Today US markets will remain closed for the Independence day holiday, thus, trade volumes will be tight.

The euro was higher against the British pound, with EUR/GBP advancing 0.13% to 0.8523, while in the mean time EUR/JPY cross slid 0.21% to 129.67. Later in the trading day Bank of England was expected to conclude its first policy meeting under the leadership of new Governor Mark Carney. Experts had projected no change in the base interest rate and stimulus.