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Euro Falls on Talk of Negative Interest Rates

March 26, 2014 at 13:06 by Miranda Marquit

Focus on 50-euro notesOnce again, ECB officials are talking about the possibility of negative interest rates to help boost the eurozone economy. As a result, the euro is heading lower against its major counterparts, even hitting a multi-week low against the US dollar.

Over the past couple of weeks, the euro has seen some strength as Forex traders consider that the ECB might not ease monetary policy further after all. With economic data in the 18-nation currency region still somewhat weak, though, it looks as though there is another case for looser policy.

At least, that’s what some ECB officials are saying. They are looking to talk down the euro — perhaps as a way to avoid making monetary policy changes. Governing council members Jens Weidmann, the head of the Bundesbank, said that negative interest rates are still an option. A stronger euro right now isn’t helpful for eurozone recovery, so it’s no surprise that policymakers are trying to keep a lid of euro strength.

Euro is lower against its counterparts, and hit a three-week low against the US dollar earlier.

At 13:03 GMT EUR/USD is down to 1.3792 from the open at 1.3827. EUR/GBP is also lower, dropping to 0.8339 from the open at 0.8364. EUR/JPY is down to 141.2865 from the open at 141.3955.

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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