Stable Euro Defies Calm Trading Day - Yen on a Rollercoaster Ride

At the foreign exchange markets, the euro presented itself as stable at the beginning of the week and quoted above the 1.07 US dollar mark. Without any significant fluctuations, the European common currency moved at a similar level as on the previous Friday during the afternoon and traded at 1.0704 dollars. The European Central Bank (ECB) set the official reference rate at 1.0720 dollars, a minimal increase compared to Friday, which made the dollar cost 0.9328 euros. The Japanese yen caused excitement as it initially depreciated significantly against the dollar, touching its weakest point in over three decades – at times, over 160 yen were required for one dollar, an exchange rate not seen since 1990. However, the yen surprisingly recovered and last stood at 157 yen per dollar. Consequently, speculation about possible interventions by governmental authorities increased in the currency market, particularly because the yen continues to be under pressure from Japan's comparatively expansive monetary policy. The intense fluctuations of the yen occurred despite a holiday in Japan, which resulted in reduced liquidity in trading. Furthermore, the tension in the market is increasing ahead of the interest rate decision by the U.S. Federal Reserve (Fed). With a focus on Wednesday, the day of the Fed's announcement, there is concern that indications of a continued restrictive monetary policy could be signaled in light of persistent inflation, which would appreciate the dollar in contrast to other major currencies such as the yen. In Europe, new inflation figures came into focus at the beginning of the week. While inflation in Spain increased slightly in April, the inflation rate in Germany remained at a consistent level after having previously fallen for three consecutive times. Robin Winkler, Chief Economist for Germany at Deutsche Bank, expressed that these preliminary inflation data could strengthen the European Central Bank's confidence that inflation would continue to subside despite a recovering economy. The market now eagerly awaits the inflation figures for the Eurozone, due to be released on Tuesday. The European Central Bank also set the reference rates for key currency pairs, with one euro being valued at 0.85493 British pounds, 167.53 Japanese yen, and 0.9776 Swiss francs. At the London Bullion Market in the afternoon, gold experienced a slight increase to 2339 dollars per fine ounce, around one dollar more than at the close of last week.