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Euro Easing Expectations Outweigh German Optimism

February 24, 2014 at 14:39 by Miranda Marquit

Stack of one-euro coins on a chartA higher Ifo boosted the euro earlier on the currency market, but the 18-nation currency has given back most of its gains and turned to losses now, thanks in large part to expectations of diverging monetary policy. Even though Germany is getting back on track, there are many who see further ECB easing as inevitable.

The latest report on Germany’s business sentiment shows an improvement in the Ifo to 111.3 from 110.6. This is good news, since Germany is the eurozone’s largest economy, and generally considered the powerhouse of the entire currency region. With Germany improving, there are hopes that the rest of the eurozone will be brought along for the ride.

These good feelings were dampened somewhat, though, by certain realities. Even with Germany, there are worries about the eurozone economy’s recovery, and there are experts that think that the region could do with a little stimulus in the form of easing from the ECB. With the prospect of easing in the eurozone in contrast with the Federal Reserve‘s tightening in the United States, the euro is losing some ground.

At 14:36 GMT EUR/USD is down to 1.3723 from the open at 1.3733. EUR/GBP is higher, gaining just barely to 0.8264 from the open at 0.8263. EUR/JPY is lower, dropping to 140.6745 from the open at 140.7215.

If you have any questions, comments or opinions regarding the Euro, feel free to post them using the commentary form below.

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