Euro Flattens Out After Hitting Recent 8-Week Highs

The Euro held steady against the US Dollar during the Asian session on Monday, with renewed hope that the US Federal Reserve and the European Central Bank would soon take policy steps to revive their struggling economies.
The Euro flattened out after hitting an 8-week high late on Friday after Fed Reserve chief Ben Bernanke's speech revived expectations of further stimulus to aid growth.
The Euro earlier today drew support on hopes of action by the U.S. Federal Reserve and the European Central Bank (ECB) with expectations that they would soon take policy steps to revive their respective economies.
The Euro earlier stood at $1.257 9, remaining flat against the Dollar and off an eight week high of $1.2638 hit on Friday.
Fed chief Ben Bernanke's speech a few days ago, has fanned expectations of further stimulus to revive growth, otherwise known as QE3.
He had announced that high unemployment is "a grave concern" to the Fed and that they would act as needed to strengthen the recovery, without saying exactly when.
I think it's very likely that the Fed may introduce QE3 in its policy meeting later this month. This may be especially so as, while many look forward to strong readings at Friday's U.S. payroll data release which they feel could reduce such expectations, its relevance will be slightly diminished in view of the larger picture.
The fact is, that the U.S has seen a loss of 8.78 million jobs since the start of the financial crises, while only approximately 4 million jobs have since been recovered. Friday's data will likely only show a few tens of thousands difference.
Expectations of a looser U.S. monetary policy might well support the Euro in the days leading to the Fed's policy meeting, which is scheduled for 12th and 13th September.
In focus now is also the ECB's policy meeting on Thursday, which is preceded by intense speculation that it will unveil its strategy to deal with the Euro zone's debt crisis.
The Dollar has come under pressure against the Yen after Bernanke's speech. It earlier stood near to a three week low of 78.187 Yen touched on Friday, at 78.29 Yen.
I think that we'll see the Dollar test 78 Yen in the near term, even though it could be supported by likely buying from Japanese importers.
Investors are choosing the Yen as a safe haven as they avoid the U.S. Dollar on concerns about QE3.
The Aussie was down at fresh six week lows against the Dollar and the Yen, after more signs of weakness in the Chinese economy and the release of weak Australian data.
The Australian Dollar slumped to a six-week low of 80.12 Yen and slid to a low of $1.0240, while a resurgent Euro hit a two month high of A$1.2266.
Concerns have emerged that the Australian economy may be losing momentum, from the mining boom spurred by Chinese demand, after a report showed that China's vast manufacturing sector had slowed further in July and after a weak reading in Australian retail sales.