Euro Weak Ahead Of ECB Meeting

The euro continued its downward slide with just one day until the European Central Bank is set to meet for its monthly policy meeting. The common currency traded at $1.35 at 5:28 GMT on Wednesday morning. Speculation that Europe's central bank will cut its main interest rate in an effort to help support the region's sputtering recovery strengthened after data from the region showed growing weaknesses. Inflation data has been the most concerning, as the eurozone's figures are far below the bank's two percent target. Even if the bank does not make a policy move, most are expecting that the bank will revise its inflation forecast for 2014 lower, perhaps below 1 percent. With many forecasting the eurozone to expand at a slower rate than previously expected, some are calling for the central bank to step in and take action. Most don't see the bank making the cut at November's meeting, but instead in December or early 2014; however many investors are cautious as a recent data would support a rate cut on Thursday. In the US, the opposite forecast lent strength to the dollar and in turn weighed on the euro. Data showing that US service sector activity picked up added to mounting evidence that the Federal Reserve could cut back on its stimulus spending sooner than previously expected. Reuters reported that some analysts believe that the vastly different US and eurozone economic outlooks will keep the euro from recovering. The common currency could potentially fall below $1.30 before the year is over.