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German Sentiment Dips

Laura Brodbeck

The euro was steady at $1.3351 at 7:40 GMT on Wednesday morning after two consecutive days of losses due to the region’s worsening economic situation.

The common currency has been under pressure as data from the bloc has been consistently lack luster, leading many to believe the region’s recovery has done an about face.

Reuters reported that Germany’s ZEW sentiment survey showed that investors were becoming increasingly pessimistic about the the bloc’s current climate as well as its future prospects.

The overall index was down to 8.6, the lowest reading since December 2012 and eighth consecutive month of decline.

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A big part of the region’s problems lie in the current tension between the West and Russia. With new economic sanctions targeting Russia’s energy, banking and defense sectors in place, the eurozone has limited transactions with one of its biggest trading partners.

In response to the U.S. and EU sanctions, Moscow has begun to draft sanctions of its own, something that could potentially hurt the bloc further.

Meanwhile, the dollar is moving in the opposite direction, as U.S. economic data has been pointing to a robust recovery.

While investors widely expect the European Central Bank to ease further in the coming months, the U.S. Federal Reserve will likely continue cutting its asset purchase program each month and eventually raise its interest rate.

Markets are closely watching the Fed as many believe that the U.S. economy is stable enough to withstand an interest rate hike sooner than planned.

However, the Fed hasn’t given any indication that it will move forward with an early rate increase.

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