Euro Lower Amid Rate Cut Expectations

The euro was steady at $1.3656 on Tuesday morning at 6:54 GMT after falling as low as $1.3615 on Monday amid the public holidays in the US and Britain.

The common currency has been weighed down by the prospect of further easing at the European Central Bank’s policy meeting next week.

ECB Bank President Mario Draghi commented on Monday that the bank was to be “particularly watchful” for any further drops in inflation, and that there was a good chance that economic data will warrant a pre-emptive move when the bank meets next week.

According to Reuters, ECB officials have been preparing a package of policy options throughout the month for review at next week’s meeting. The options will include interest rate cuts, taking the deposit rate below zero and targeted measures to help increase lending to small businesses.

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Meanwhile, parliamentary elections over the weekend have shaken the region’s mainstream political parties as radical, anti-European parties made gains in popularity, which could challenge the bloc’s fundamental policies.

Results out on Monday showed that voters in France, the UK and Denmark largely favored nationalist parties who oppose the integration within the eurozone.

Despite the sudden uptick in protest votes, the mainstream parties will still make up the majority of the European Parliament with about 70 percent of the seats, meaning that lawmaking in the bloc shouldn’t face any major disruptions.

However, the vote shows a growing dissatisfaction with the region’s struggle to emerge from a three year crisis.

With unemployment still at record highs and many losing trust in the region’s leadership, political groups that were once considered to be on the fringe have begun to creep into the majority.