Many are now expecting that the European Central Bank will cut its benchmark interest rate at its next meeting due to the latest confidence data out of the eurozone. Economic confidence continues to dwindle, and that could lead the ECB to cut rates in a stimulus effort.
The latest economic confidence data out of the eurozone shows a larger slump than expected. According to the Economic Sentiment Indicator, confidence in the eurozone economy dropped to 88.6 in April.
Confidence indicators across the eurozone are slipping, including in Germany, the largest economy in the 17-nation currency region. With even Germany struggling, the rest of the eurozone is likely to follow suit.
As a result of the latest economic data, many expect that the ECB will cut interest rates from 0.75 per cent to 0.5 per cent sooner than expected in an effort to boost the economy.
Even with these expectations, though, the euro is gaining ground against its major counterparts. Risk appetite has returned to the markets, and there is sufficient optimism elsewhere that the euro is finding support.
At 15:22 GMT the euro is heading higher against the US dollar, with EUR/USD up to 1.3103 from the open at 1.3049. EUR/GBP is up to 0.8451 from the open at 0.8425. EUR/JPY is up to 128.4530 from the open at 127.8300.
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