Euro dropped sharply against the dollar during the U.S. session on speculation of a rate cut by the European Central Bank on Thursday. Rising Spanish bond yields also pressured the single currency.
EURUSD fell to 1.2507 for the first time since the EU Summit last week, retracing 75 percent of the sharp rally after the EU deal that lifted the pair to 1.2691 last Friday. Just during New York trading hours euro dropped 0.4 percent.
Sterling came under pressure after a survey of the U.K.’s services sector showed activity slowing significantly in June to its slowest pace in eight months. Further weighing on the pound is expectations of more QE form the Bank of England at its policy meeting tomorrow. GBPUSD fell 0.7 percent on the day to a low of 1.5573 compared with 1.5707 late Tuesday.
USDJPY was stuck in a tight range of 79.75 and 79.85 while euro dropped 0.8 percent against the yen to a low of 99.78, versus an earlier high of 100.65.
Overall, volumes are light given the U.S. Independence Day holiday today, and market participants are being cautious ahead of the ECB’s and BoE’s rate decision tomorrow, and then the US employment report on Friday.