Euro Remains Below $1.30 As Ceasefire In Ukraine Looks Likely To Deteriorate

The euro remained below $1.30 on Monday morning after losing ground last week following the European Central Bank’s policy meeting on Thursday. The common currency traded at $1.2952 at 5:00 GMT on Monday morning as the worsening situation in Ukraine put further pressure on the bloc’s already struggling economy.

Data out on Friday confirmed that the eurozone saw no growth from the first quarter to the second quarter and just a 0.7 percent increase from last year’s second quarter GDP. The data further supported the European Central Bank’s decision to ease further by lowering its interest rate and introducing another stimulus package set to be revealed in October.

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Also on Friday, EU policy makers elected to introduce more sanctions against Russia in response to Moscow’s involvement in the ongoing conflict in Ukraine. The Wall Street Journal reported that the new sanctions will further limit the nation’s energy and defense sectors and are set to be implemented on Tuesday.

The announcement of the new sanctions came in spite of a ceasefire agreement between Ukraine’s Petro Poroshenko and the separatists’ leader. However, eurozone policymakers have said that the new sanctions may be lifted if Russia changes its position and agrees to work together with Ukraine to find a peaceful solution.

Moving forward, many are expecting to see Russia respond with more sanctions of its own, something that could further weigh on the eurozone’s economy. In August, Russia responded to the West’s ramped up sanctions by banning certain agricultural exports from the eurozone, and will likely  respond similarly to the latest round of sanctions.