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The euro hung below a two-week high to the dollar as investors braced for the European Central Bank’s first interest rate increase since 2011 and the scheduled reopening of a key Russian gas pipeline later in the day.

The euro edged up 0.06% to $1.0188, following a 0.39% retreat overnight from an intraday peak of $1.0273, the highest since July 6.The euro edged up 0.06% to $1.0188, following a 0.39% retreat overnight from an intraday peak of $1.0273, the highest since July 6.

The euro had enjoyed three sessions of strong gains this week on expectations the ECB might deliver a big 50 basis-point rate hike and a Reuters report that a key Russian gas pipeline would reopen on time following a 10-day maintenance shutdown. The monetary authority is also likely to provide more details of a new tool aimed at controlling outsized rises in bond yields on Europe’s periphery.“Italy’s political uncertainty complicates the ECB plans to deliver details on its new anti-fragmentation tool, especially regarding the conditions for the tool to be triggered,” and alack of clarity is likely to drag on the euro, NAB currency strategist Rodrigo Catril wrote in a client note.

 

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