Mersch's Comments Have Little Effect As ECB Action Is Priced In

The euro remained above $1.37 on Tuesday, trading at $1.3705 at 6:12 GMT.

The common currency has been relatively flat against the dollar despite soft data and speculation that the European Central Bank will ease further at its June meeting.

Most analysts see the currency maintaining its position as the ECB action has been priced in.

The common currency dipped slightly on Monday after ECB executive board member Yves Mersch reiterated the bank’s intention to make a policy change in June.

The Wall Street Journal reported that Mersch, speaking in Munich, said that the probability of the bank loosening its policies has “risen considerably."

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He went on to say that the bank has the necessary tools to fight the region’s falling inflation, but was not specific about what steps the ECB is considering. Many are expecting the bank to lower all of its key interest rates, including the deposit rate, which would be taken below zero.

If the bank does decide to lower the deposit rate, it will be the first major central bank to make use of a negative rate.

Meanwhile, the bloc is in the midst of European parliamentary elections; but polls show that the region’s voters are not connecting with the candidates.

The general consensus seems to be that the outcome of the election will make little different to the future of the region, leaving many to cast protest votes for populist parties.

However, the vote in Greece will be closely watched as the nation’s coalition government has been on shaky ground. If the coalition’s New Democracy and Pasok parties don’t receive a higher number of votes than the radical opposition Syriza party, the nation could be forced to hold early national elections.

Such an incident would likely mean a prolonged period of political instability, something the recently bailed-out nation’s fragile recovery probably can’t weather.