The euro weakened below $1.35 for the first time since February, suggesting the unprecedented steps taken by the European Central Bank may be working.
The measures taken last month by ECB President Mario Draghi included becoming the first major central bank to cut the deposit rate to below zero while lowering the benchmark refinancing rate to a record 0.15 percent. He said on July 14 that currency appreciation is “a risk to the sustainability of the recovery.”
The euro slid 0.2 percent to $1.3494 as of 9:25 a.m. New York time. It reached $1.3491, its lowest level since Feb. 6.
The single currency will drop to $1.3212 before trending as low as $1.2685, Bank of America Corp. technical strategist MacNeil Curry wrote in a report on July 16, a level last touched in November 2012.
The June 5 ECB package was the most dramatic announcement since Draghi declared his plan to “do whatever it takes” to save the euro in the summer of 2012. While that succeeded in keeping the bloc together, the ECB is still trying to fix its battered economy as banks in southern Europe unwind bad loans and shy away from fresh lending to businesses that could spur growth.
In a liquidity drive that pins cash to banks’ performance in extending loans to the economy, Draghi said July 14 that the Frankfurt-based ECB could extend as much as 1 trillion euros ($1.36 trillion) in its Targeted Longer-Term Refinancing Operation starting in September.