Investing.com - The euro was close to two-year lows against the dollar on Monday amid heightened expectations for more easing by the European Central Bank to shore up growth in the euro area economy.
EUR/USD hit lows of 1.2363, not far from the two-year trough of 1.2356 struck on November 7 and was last at 1.2396.
The single currency weakened across the board after ECB President Mario Draghi warned Friday that inflation expectations were declining to levels that were very low and said the ECB is ready to expand its stimulus program to boost inflation as quickly as possible.
The annual rate of inflation in the euro area was 0.4% in October, well below the ECB’s target of close to but just under 2%.
The single currency was slightly higher against the yen, with EUR/JPY easing up 0.14% to 146.17, off Friday’s highs of 148.41.
Elsewhere, USD/JPY edged up 0.11% to 117.90, holding below the seven-year peaks of 118.96 reached last Thursday.
The pair slid lower on Friday after Japan’s Finance Minister Taro Aso voiced concerns over the weaker yen, saying the speed of the currency’s recent decline against the dollar was “too fast.”
Japan’s Prime Minister Shinzo Abe dissolved parliament on Friday, clearing the way for elections to be held on December 15 to seek a fresh mandate for his economic policies, which call for a weaker yen.
Demand for the dollar continued to be underpinned by the diverging monetary policy stance between the Federal Reserve and central banks in European and Japan. The Fed wound up its asset purchasing stimulus program last month and is expected to start raising rates around September 2015.