Ahead of today’s release of Germany CPI data and tomorrow’s inflation report for the Eurozone, the common currency managed to hold onto some modest gains against the greenback but investors multi-pronged concerns pushed the Euro lower. Some analysts believe that any gains for the Euro are likely to be limited and fleeting, and like FX traders, they are counting heavily on the European Central Bank to move toward a more accommodative stance when they issue their monetary policy decision next week. Of course, as ECB officials have pointed out, a policy shift is dependent upon the Eurozone’s inflation which analysts believe could have fallen to 0.1% (QoQ) in August, down from 0.4% in July.
As reported at 5:01 a.m. (EDT) in New York, the EUR/USD had edged away from the recently struck 1-year trough to trade at $1.3204 but quickly lost steam and is now trading at $1.3175 while the EUR/JPY is now trading at 136.5070 Yen, nearer the lower end of the day’s range (136.4989 Yen to 137.1989 Yen). The EUR/GBP is also lower at 0.7946 Pence, which is also the session low.
Ukraine-Russia Conflict Intensifies
The situation in the Ukraine, with a possible escalation of the conflict with reports that troops from Russia were now fighting alongside separatist insurgents, is putting pressure on the Euro as well as riskier assets. Though negotiations between the parties had recently been under way, analysts believe that the markets’ response may have been premature and that as a result, the pressure on the Euro could intensify.