The hard times seem to continue for the eurozone economy as the euro fell as far as USD 1.3119 in Asian market, reaching an all time low since early September last year.
The European currency last traded at USD 1.3128, flat on Monday. It also traded at a five-week low against the British pound of 78.96 pence.
According to the analysts, the worse days loom large on eurozone, the 18 nations bloc, amid the ongoing Ukraine crisis and stubbornly lower rate of inflation. In such a scenario, pressure mounts on the European Central Bank to provide immediate stimulus to boost growth and bring the European economy on track.
Lutz Karpowitz, currency strategist at Commerzbank, said, “There are several reasons to continue selling the euro. Firstly, the escalating crisis in Ukraine, inviting further sanctions, increasing the risk of the eurozone economy being affected by the situation. Even more importantly is the ECB rate meeting.”
ECB boss Mario Draghi, the most powerful eurozone policymaker, had also signaled about reformative measures at a meeting of central bankers that ended last weekend to boost the sluggish economy.
What’s on Draghi’s mind is likely to be clear as early as next Thursday at the first meeting of governing council of the bank following the summer break.
According to financial analysts, the ECB boss may bring “quantitative easing or QE” to save the eurozone.
QE has been opted by central banks of many countries, including Britain, Japan, the US and Switzerland, to fight the financial turmoil.
Karpowitz said that the Commerzbank is not expecting the ECB to announce quantitative easing or asset purchases at the governing council meeting next week.
“The uncertainty over what’s on the ECB’s cart and what would be its future policy action are likely to keep the euro on the defensive,” Karpowitz added.
The month of September started on a subdued note for euro as the European currency posted its second straight month of losses against its American counterpart in August, when it fell 1.9 percent after a 2.2 percent decline in July.
In the recent weeks, the franc has also emerged stronger against euro by hitting 21-month high against the European currency at 1.20 franc per euro.
The recent official figures show the eurozone in bad shape as it has shrunk marginally over the past three years.
In August, the rate of inflation continued to decline to 0.3 percent from 0.4 percent in July. The rate of unemployment also hovered near record levels in July after remaining stuck at 11.5 percent.