EUR/USD Drifts Below 1.06 Remaining on Defensive

The euro was on the defensive on Monday morning, pressured by the European Central Bank’s stimulus driving interest rates lower in the euro zone and on concerns over talks between debt-strapped Greece and its creditors over more funding for Athens.

The euro traded at $1.0615, flat on the day after having touched a 3 1/2-week low of $1.05670 to post its fifth straight day of losses on Friday.  “We think the euro will fall below parity against the dollar by the end of the year because of the ECB’s easing and low returns on capital in the euro zone,” said Shin Kadota, chief FX strategist at Barclays in Tokyo.

Investors have been dumping the common currency as the ECB’s bond buying since last month has been driving down euro zone bond yields to negative levels in many countries.