Euro on the fall – will this continue?

Tuesday was a day to forget for the euro, as it struggled against most major currencies.

Italian Industrial production was released at 9am, below expectation – although this had little effect on Euro’s strength. The biggest issue for the single currency was the speculation at around 10am, when the Liikanen report suggested that inflation has not been growing at the speed expected, and that the deposit rate may have to be cut by a further 0.1%. This caused a bout of euro weakness, and we saw sterling rise to towards recent highs. Against the dollar, the euro hit lows not seen since April. With the Eurozone programme of quantitative easing expected to be extended next month, as well as an interest rate hike in the US, it looks like we could see continued euro weakness over the coming weeks.