Euro Drops as Easing Bets Rise

Euro is heading lower today, thanks in large part to the fact that bets are on the rise related to the idea that the European Central Bank is likely to put into place more easing measures for the 18-nation currency.

At the end of last week, ECB President Mario Draghi indicated that the central bank is prepared to use any tools it has at its disposal to boost the eurozone economy. Many Forex traders are taking that to mean that there is a good chance that the ECB could announce measures like asset purchases in the coming months, if the level of inflation continues to be an issue.

The idea that the ECB is ready to embark on further easing (deposit rates are already negative) is weighing on the euro today. The policy divergence between the euro and other major currencies, particularly the US dollar and the UK pound, is becoming more apparent, and resulting in more difficulties for the euro.

However, the exercise now isn’t to bolster the euro; it’s to try and stimulate the ailing eurozone economy.

At 10:27 GMT EUR/USD is down to 1.3201 from the open at 1.3202. EUR/GBP is also lower, dropping to 0.7956 from the open at 0.7974. EUR/JPY is down to 137.2425 from the open at 137.5780.

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