Forex Flash: ECB is technically prepared to introduce negative deposit rates – BTMU

FXstreet.com (Barcelona) - The euro has nudged higher against the US dollar climbing back above the 1.30-level driven by a weaker US dollar. The Euro upside potential in the near-term has been dampened by dovish comments from ECB Governing Council member Visco who told CNBC yesterday that the ECB is “technically prepared” to introduce negative deposit rates depending upon whether the economy needed further help. Bank of Italy Governor Visco also stated that he believes the measure would be “effective” while downplaying the importance of any unintended consequences, which could be worked on.

His comments by and large echo those at the last ECB monetary policy meeting from President Draghi and highlight that there is likely strong support from fiscally challenged members to ease monetary conditions further to support growth. According to the BTMU Research Team, “The Eurogroup meeting yesterday approved the first disbursement of aid to Cyprus and next €7.5 billion tranche of aid to Greece. Greece is set to meet is budget targets this year and next according to draft Troika report although it noted the speed of realizing privatization revenues remains unsatisfactory lowering their target revenue for 2013 to €2.0 billion.”