The euro was steady at $1.3392 to begin the week as investors remained cautious about geopolitical tension around the world. Although there has been some improvement in the conflicts in both Ukraine and Gaza, there is worry the situation remains unstable and could deteriorate quickly.
On Friday, markets were relieved to hear that Russia was putting a stop to its military exercises at the Ukrainian border. With fighting between separatists and the Ukrainian military showing no signs of slowing, many worried that Russia would send in troops as it did when Crimea was annexed.
However, eurozone businesses are still being threatened by the sanction war between Moscow and the West. After Russia was accused of sending arms to Ukrainian rebels, the United States and the EU tightened their sanctions against Moscow in an effort to economically isolate the nation. Unfortunately, the sanctions will likely have a negative impact on the already fragile eurozone economy, as Russia is one of the bloc's largest trading partners.
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Reuters reported that second quarter GDP data from the bloc is expected to show that the region's economy improved very little, if at all. The Italian economy is expected to have contracted from April to June while Germany, the bloc's largest economy and the steam engine that carried the region through its economic crisis, is also expected to have lost momentum.
Moving forward all eyes will be on eurozone data as the region attempts to recover. The European Central Bank's June easing package is expected to take effect over the next couple months, but most see the bank further loosening its policy by introducing some type of quantitative easing package similar to that seen in the United States.
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