By: Barbara Zigah
After yesterday’s relatively unsurprising announcement from the ECB that the Eurozone might soon see a rate increase, the common currency Euro fell hard, and today struggles to regain its balance. Most markets had already priced in a July rate hike, and the only surprising aspect of the press release was the ECB’s calls for Eurozone banks to shore up their capital reserves in anticipation of increased borrowing demand from consumers, which to many cast some doubt on the certainty of the July hike.
As reported at 1:54 p.m. (JST), the Euro was trading against the greenback at $1.4495, a decline of 0.1%, recovering slightly from the $1.4477 low struck yesterday after the announcement. Analysts expect that the Euro will be under some sell pressure, and likely head for $1.42 or $1.43 over the near term; on the upside, it’s not likely to rise beyond $1.46. Now markets will refocus attention back to Greece’s debt problems and other fiscally troubled Eurozone members.
Some analysts say that the markets appear worried about the ECB’s wholesale rejection of a Greek debt restructuring, which many industry experts believe may be the troubled nation’s only true recourse