Euro to Falter as European Commission Warns of Deeper Recession

"The EUR/USD struggled to hold its ground on Tuesday amid as Consumer Confidence in the world's largest economy hit a five-year high, and the exchange rate may continue to track higher over the next 24-hours of trading should the European Commission warn of a deepening recession in the euro-area. Indeed, the updated forecast from the group may be a precursor to the European Central Bank interest rate decision scheduled for the following week as the Governing Council is expected to release its most recent projections, and the weakening outlook for growth and inflation may prompt a greater discussion for a negative interest rate policy (NIRP) as ECB President Mario Draghi tries to steer the region out of recession. At the same time, the central bank may also purchase Asset-Backed Securities (ABS) in the coming months as in order to encourage private sector lending, but the non-standard measure may have a limited impact in lifting the real economy as the region continues to face record-high unemployment along with a slowdown in consumption."