Euro at 7.5-month low after Yellen's speech

Today the euro is moving closer to a 7.5-month low against the dollar amid expectations that the European Central Bank (ECB) will announce additional stimulus to the economy and that the Federal Reserve will raise interest rates.

The diverging policies of the two central banks again came to the fore yesterday after Fed Chairman Janet Yellen hinted about raising interest rates later this month.

Her speech dragged the euro to 1.05500 against the US dollar, which was the lowest level since mid-April. The euro lost 0.16% and was trading at $1.0614 and recovered  60 pips since the intraday low.

Later today is expected ECB to present a combination of measures, that could include lowering the interest rates on deposits and increase in the volume of the program for bonds purchase.
The European currency depreciated by 7.2% since the previous meeting of the ECB.

Naturally, US dollar is investors’ target who sell euro, especially since the Fed hints about raising interest rates in December. The dollar index rose to 100.510 points, which was its highest level since April 2003.
Yellen said yesterday : "And, as I have noted, continuing improvement in the labor market helps strengthen confidence that inflation will move back to our 2 percent objective over the medium term."
“Holding the federal funds rate at its current level for too long could also encourage excessive risk-taking and thus undermine financial stability”, said Yellen.