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EUR/USD Drops Below 1.26 Amid ECB Speculation

The euro fell to the lowest level in two years against the dollar as slowing inflation boosted the case for the European Central Bank to add further monetary stimulus to avert deflation.

The 18-nation currency had its worst quarter since 2010 amid the ECB’s moves to swell its balance sheet and cut borrowing costs to spur growth. Russia’s ruble sank after Bloomberg News reported the central bank is weighing capital controls, and Canada’s dollar weakened as the nation’s economy stalled. The U.S. dollar climbed the most in six years this quarter as the Federal Reserve considers raising interest rates.

“The violence of this euro move has been fairly dramatic,” said Camilla Sutton, head of currency strategy at Bank of Nova Scotia in Toronto. “We’re in this period of broad U.S. dollar strength. It’s fairly hard for almost any currency to strengthen in that kind of environment.”

Bloomberg [1]

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