The euro has started the week on its back foot and experienced moderate weakening against a number of major currencies due to the problems in the Ukraine. Poor euro performance was also a result of remarks by European Central Bank (ECB) President Mario Draghi. A number of key economists have raised concerns that the single currency is currently overvalued, thus inhibiting the Eurozone’s export growth. These concerns were echoed by Draghi as he threatened increased monetary stimulus if we see further euro strength. Euro appreciation has been substantial and – in the view of many – unwarranted over recent months. Draghi’s guidance quelled the strengthening of the euro in the short-term, however it is likely to take more than mere posturing to have a more considerable impact on the euro’s fortunes.
Industrial Production data for the eighteen-nation bloc was also released yesterday and came out marginally worse than expected, possibly contributing to poor performance. German ZEW Economic Sentiment figures are set to be released at 10.00am this morning. These are produced following a survey of key investors in the nation, reflecting their opinion of the Eurozone’s economic outlook. As such, they have the potential to influence movements in euro rates throughout the day.
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