Euro Slides Ahead Of ECB Meeting

The euro lost some of its momentum on Wednesday with the European Central Bank’s July policy meeting set to take place in just one day.

The common currency traded at $1.3671 at 4:45 GMT as investors anticipated that the ECB would use rhetoric to talk the region’s currency lower on Thursday.

The ECB is not expected to make any major policy changes this month after unveiling an aggressive stimulus package at its June meeting.

The bank elected to lower its interest rates and take its deposit rate below zero at last month’s meeting, making it the first major central bank to effectively charge banks for holding on to large sums of cash.

While policy changes may be off the table for now, some are expecting to see bank President Mario Draghi promise further easing due to the euro’s recent strength.

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Although the bank has made it clear that the exchange rate is not a policy target, Draghi admitted that the euro’s strength did play into the bank’s decisions as it could have a negative effect on inflation. Recent data from the US has depressed the dollar and given the euro a chance to rise, bringing the common currency to a six week high on Tuesday despite lackluster economic data.

Reuters reported that eurozone unemployment remained steady at 11.6 percent in May, proving that the region’s recovery was still struggling. Though some of the bloc’s data has shown modest improvement, economists are worried that the eurozone can’t truly recover until new jobs are created, which will in turn spur on domestic spending.