Diverging policies in Europe, U.S. will drive forex swings

ECB governing council member Jens Weidmann said earlier that diverging ways of monetary policy in the euro zone and the United States will likely drive exchange rate fluctuations.

The shared currency has fallen steeply against the dollar recently on expectations that the U.S. Federal Reserve may raise interest rates next month, while the ECB is expected to add more stimulus at its December meeting.

"It wouldn't be very surprising to see that if the monetary path on this side and on other side of the Atlantic diverge and diverge perhaps even further this would be reflected in exchange rate movements," Weidmann said at Paris' Sciences Po University.

"Of course the exchange rate is not a policy target," Weidmann, who is also president of Germany's Bundesbank, added.

The last time a similar situation happened was in May 1994 when Bundesbank trimmed its rate to 4.5% from 5%, while the Federal Reserve increased its benchmark to 4.25% from 3.75%.

EUR/USD was last seen at 1.0762, down 0.52%, while EUR/GBP dipped 0.62% to trade at 0.7056.