Euro weakens over Nowotny’s dovish comments

Dovish comments from European Central Bank's (ECB) Ewald Nowotny couldn't have come at a much better time. Euro was hovering around key 1.15 level, when comments hit the wire.

Mr. Nowotny, is a governing council policymaker in European Central Bank (ECB) and governor of Bank of Austria. He suggested that the bank is clearly missing its inflation target, which is not only way below central bank's target of below but close to 2%, it is once again headed towards negative zone. Friday is the release for consumer price index, expectation is for prices to drop by -0.1% in September from August.

Mr. Nowotny's new dovish comments are clearly in contrast to his comments three weeks ago, where he suggested equilibrium in prices.

European Central Bank (ECB) will announce its policy decision on next Thursday. Though ECB is expected to maintain its policy, President Draghi might choose to provide some explicit clues over further easing.

Market participants and economists are mostly unanimous over further easing from ECB, suggesting that it is not a matter of if but when.

Euro fell to as low as 1.142 against Dollar before recovering and currently trading at 1.144. Mr. Nowotny's comments not necessarily weaken EUR/USD further as Dollar leg of the pair is pretty weak. Nevertheless, it might put Euro into consolidation mode against Dollar with 1.15 looming as key resistance.