The euro remained above USD1.02 against the dollar in early afternoon trade, boosted by hopes that the European Central Bank plans to review its much-criticised 2.0pc inflation target At 1315, the single currency was trading at USD1.215, down from last week's highs, but still well supported "We knew a review of ECB activity was underway to help the Bank cope with EU enlargement, but we did not know that the much-maligned 2pc inflation target was set for review as well," said Niall Dunne, economist at Ulster Bank The ECB was criticised this year for not cutting rates sooner and defended its stance by citing its mandate to keep inflation at or below 2.0pc.
"Lower rates would prevent them achieving this target. But now, if the inflation target could be raised - which it should be - then the ECB could take more aggressive monetary action in future," added Dunne. "Any sign of reform at the ECB is going to be good for the euro. Analysts also noted that the dollar remained under continued pressure from international tensions and the lack of comment from the new US economic team on dollar policy//www.fxcentre.com