Led by German collosus Deutsche Bank, euro-area financials are having a torrid time of late, and some analysts think this could make the ECB more bold when it comes to deciding on further easing.
The euro is still looking solid versus the pound and the dollar both from its charts and its fundamentals.
The new year starts off with a bevy of German numbers that will set the tone for the shared currency.
Causing the latest round of euro weakness was speculation that the European Central Bank (ECB) would announce a two-tier deposit rate in December.
The ECB's fight on negative inflation will be escalated in December - what will happen to the euro though?
Those watching the markets for a higher sterling to euro conversion have ECB President Mario Draghi to thank this Thursday.
Economists from two of Europe’s leading banks believe an announcement for further quantitative easing at the European Central Bank has already been baked into the euro to dollar exchange rate.
The euro to pound sterling exchange rate (EURGBP) is likely to trade lower argue ING.
The pound sterling appears to have broken out of a mid-term downtrend.
The euro to dollar exchange rate will not suffer greatly should the European Central Bank expand its asset purchase programme (Quantitative Easing / QE).
Policy divergence between the US Federal Reserve and the European Central Bank will pressure the euro to dollar exchange rate (EURUSD) below 1.00 over the course of the next year.
Expect the euro's strength to be undercut when the European Central Bank announces an extension to the quantitative easing programme, and even another interest rate cut.
The British pound to euro exchange rate (GBPEUR) has advanced following further signs the European Central Bank is looking to expand its quantitative easing programme.
Page 6 of 6