Euro continues to slide today, following a rather dramatic drop earlier. Expectations that the European Central Bank will have to take action regarding the slow-moving eurozone economy are rising, and a rate cut or another round of special financing are possibilities.
Recently, the data out of the eurozone has been discouraging. The ECB has a target inflation rate of 2 per cent, but the latest report shows that eurozone inflation is at 0.7 per cent. Additionally, unemployment throughout the 17-nation currency region remains stubbornly high. With concern about the speed and sustainability of the eurozone recovery becoming a focus, it is little wonder that the euro is losing ground.
In fact, earlier, EUR/USD saw its biggest single-day drop in six months. The euro is still sliding. Many expect that the ECB will have no choice but to enact further easing measures in the hopes of stimulating the eurozone economy. There are thoughts that a rate cut could come as early as next week, or that the ECB will announce another round of special financing.
In any case, it looks like some degree of weakness is likely for the euro.
At 14:31 GMT EUR/USD is down to 1.3492 from the open at 1.3584. EUR/GBP is down to 0.8466 from the open at 0.8468. EUR/JPY is down to 133.2675 from the open at 133.6005.
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