The euro opened at 1.3717 mid-way in its 1.3698-1.3731 range, with trading reverting to its pre-March 8th ECB meeting volatility. ECB President Draghi's threat of June action against low inflation and a high euro still resonates, blocking any sustained profit taking on short positions.
An early New York rally to 1.3722 just minutes after the 8:00 am open on weakening U.S. yields faded quickly with the euro dropping to 1.3705. Another softer rally reached 1.3719 but that reversed sharply from 1.3715 to 1.3706 and then on to 1.3704 before returning once again to 1.3720. April PPI at 8:30 am (0.6% m/m vs 0.2%, 2.1% y/y vs 1.4%) had helped the dollar to its initial high but steadily weaker U.S. yields kept the euro bouncing back. The generic 10-year Treasury finished off 7 basis points at 2.54%.
A comment from Bundesbank President and ECB board member Jens Weidmann that
the German central bank is ready to back policy action by the ECB if needed pushed the euro to its low of 1.3703. He noted a slight deflation risk in the EMU. Bundesbank approval is seen as a necessary pre-condition to ECB action in June.
The afternoon saw a very quite range of 1.3703-16, closing at 1.3714.