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Euro to see further declines
Published on 21.07.2016 08:11

The Euro is expected to come under further pressure in the following weeks as expectations grow for a rate hike from the US Federal Reserve as well as the possibility that the ECB will increase their stimulus program as the year unfolds.

In Thursday’s ECB meeting, President Mario Draghi is expected to come under fire for not doing enough to boost the Eurozone economy and it’s lagging inflation problem.

The central bank is already pumping 80 billion Euros a month into the economy to help it recover from the 2008 financial crisis.

“Mario Draghi will keep his options open for further easing,” helping fuel a gradual decline in the euro amid broad dollar strength, said David Forrester, a foreign-exchange strategist at Credit Agricole SA’s corporate and investment-banking unit in Hong Kong. 

Most analysts don’t expect any concrete measures in Thursday’s meeting but the do expect some whispers that the ECB will make a move in September.

 “Resilient markets after the Brexit vote will, in our view, allow the ECB's Governing Council to stop at simply delivering hints at an imminent additional layer of stimulus on 21 July, reserving hard announcements for September.” noted Bank of America Merrill Lynch’s Head of Research, Tomos Rhys Edwards.


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Andrew Masters


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