EUR likely to appreciate amid growing global turbulence

The ECB has indicated further monetary policy easing measures, while the Fed is yet to hike interest rates in its next meeting. In the past couple of weeks, the USD has eased remarkably while euro has appreciated on a trade weighted basis. The ECB is likely responsible for the volatility in the EUR exchange rates as the central bank failed to deliver its expansionary measures announced early October.

Currently, EUR/USD is trading 0.23 percent up at 1.1216 levels. The euro is trading higher as compared to December and October levels when the ECB had last indicated for further measures. Simultaneously, the expectations for long term inflation rate have declined since early January. The ECB is likely to acknowledge the fact that the exchange rate is perhaps the only measure it is left with to boost inflation. As long as risk aversion remains high, euro is likely to appreciate in near term as traders perceive it as safe haven.