The European single currency was chopped on Tuesday, January 16, in early European trading by reports that parts of Germany’s main opposition party are resistant to reforming a “Grand Coalition” with Angela Merkel’s conservatives.
It then took another step back after sources at the European Central Bank told Reuters that despite growing talk it will stop its mass stimulus program at the end of September, policymakers were unlikely to flag its end just yet.
The euro slipped down to $1.2215 EUR= from Monday’s three-year high of almost $1.23. The Japanese yen JPY=, which has also been on a strong run, was 0.15 percent lower at 110.6 per dollar.
Euro zone government bond yields switched direction too, with German Bunds coming off recent highs and low-rated Italian and Portuguese debt outperforming as investors returned to some of 2017’s most profitable trades.
“We need more thorough analysis before making any change,” one of the ECB sources said.
