|01-13-2015, 04:19 PM||#1|
Euro extends losses amid easing speculations, Fed comments
The euro fell against the dollar on Tuesday amid expectations that the European Central Bank (ECB) will expand its quantitative easing policy to support the struggling euro zone economy.
The ECB might announce a sovereign bond buying program at the end of this month, a decision that came after expectations that the euro zone might face deflation, which will be confirmed by the consumer price reading this weekend.
On the other hand, concern dominates European markets ahead of the parliamentary elections in Greece, as the radical left-wing opposition party Syriza which opposes the government financial rescue packages and international austerities might win the elections.
If victory landed on Syriza, the future of Greece remains on the line, where Greece has faced a danger of falling into bankruptcy before, but the rescue packages have had a role in preventing that; if Syriza won, the threat of an economic downturn is back.
The third factor in the euro decline is the U.S. dollar, which was supported by comments issued by Federal Reserve of Atlanta President Dennis Lockhart saying that the Federal Reserve should look to raise interest rates by the middle of 2015, even if inflation doesn’t pick up.
The euro is expected to continue dropping today especially with the Federal Reserve of Minneapolis President Narayana Kocherlakota remarks about the outlook of the U.S. economy later today.
The euro remains in a downtrend at its lowest level in nearly nine years, especially with the ECB meeting and the Greek elections approaching, but the outlook of the euro against the dollar remains negative in the coming period.
Euro dipped by 0.33% against the dollar at 10:25 GMT around 1.1793, compared with the entry level 1.1832.
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