Easing tension in Ukraine helped take some pressure off of the euro, but it still struggled with a weak economic outlook.
The common currency traded at $1.3301 at 8:00 GMT on Wednesday morning as investors looked ahead to the upcoming Jackson Hole summit for more clues about the direction of the world’s central banks.
Tension in Ukraine lessened this week, taking some of the heat off of the eurozone as many are worried that the mounting sanctions war with Russia will further stifle the bloc’s economy.
The Wall Street Journal reported that Russian President Vladimir Putin is set to meet with Ukrainian President Petro Poroshenko next week to discuss how to end the ongoing struggle between Ukrainian forces and pro-Russian separatists. The meeting will be their first since June and marks a vial turning point as Russia gives in to international pressure to intervene diplomatically.
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However, the tension between the West and Russia is still at an all-time high with Russia preparing new sanctions to fight back against those enacted by the U.S. and the EU last month.
The geopolitical turmoil in Eastern Europe has added to the eurozone’s growing economic woes, leading investors to be cautious.
Most expect that the European Central Bank will maintain its accommodative monetary policy for the foreseeable future, and some are expecting to see further easing come autumn.
The bank announced a series of stimulus measures in June, which have yet to materialize in any of the region’s economic indicators. Now that the bloc has cut down on transactions with Russia, one of its largest trading partners, many see the economy sliding even further.
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