FOREX-Euro dragged down before ECB meeting, hits one-week low vs yen

Wed Mar 9, 2016 6:53am EST
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* Euro weaker as investors position for dovish ECB

* Euro hits one-week low vs yen

* BOC, RBNZ policy reviews loom (Recasts, updates prices)

By Anirban Nag

LONDON, March 9 (Reuters) - The euro fell to a one-week low against the yen and dropped below $1.10 on Wednesday, before a meeting of the European Central Bank, which is expected to take interest rates deeper into negative territory and ease monetary policy yet more.

The ECB is expected to cut the deposit rate by 10 basis points to -0.40 percent, announce more asset purchases and possibly introduce tiered interest rates like the Bank of Japan in a bid to boost inflation.

The euro was down 0.7 percent at 123.08 yen and 0.4 percent lower against the dollar at $1.0963, inching back towards a one-month low of $1.08255 struck on March 2.

Those positioning for more losses in the euro are, however, wary about placing significant bets against it after being burned in December, when the ECB eased policy less than expected, leading the euro to rise 4 percent against the dollar.

"Given expectations are so high that the ECB will ease policy, there is a chance that it could fall short and we could see a bounce in the euro," said Niels Christensen, FX strategist at Nordea.   Continued...