Euro Drops on Bundesbank Report

It really looks as though the eurozone is going to see some further stimulus in the next couple of months, and the euro is down almost across the board on the news. The latest Bundesbank report is supportive of stimulus measures, and that could mean more euro weakness.

Germany’s central bank issued a report indicating that it is prepared to back stimulus measures in the eurozone. Some of these stimulus measures include negative deposit rates (to encourage banks and people to spend their money rather than save) and even asset purchases.
Last week, ECB President Mario Draghi said that he might be ready to encourage easing as early as June, and with the blessing of the Bundesbank — which represents the monetary policy of the eurozone’s most influential economy — it could be a reality. As a result, it’s not much of a surprise that the euro is falling against its major counterparts.
Also not helping the euro is a bit of risk aversion. As tensions mount over Ukraine, high beta currencies like the euro are likely to feel the brunt of it.
At 13:45 GMT EUR/USD is down to 1.3721 from the open at 1.3757. EUR/GBP is down to 0.8145 from the open at 0.8156. EUR/JPY is down to 140.1585 from the open at 140.4965.

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