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Euro to US Dollar (EUR/USD) Exchange rate forecast to soften as Crimea votes to join Russia

The Euro was little moved against the US Dollar on Thursday morning as investor attention was focused on the upcoming European Central Bank policy meeting but the currency could decline as a vote held in Crimea could renew fears over tensions in Ukraine.

MPs in the Crimea formally voted for the region to become a part of the Russian Federation and announced that a referendum for the people of Crimea will be held next week on the issue. The announcement comes as EU leaders meet in Brussels to discuss how to respond to Russia’s troop deployments in Ukraine.

“This is our response to the disorder and lawlessness in Kiev,” Sergei Shuvainikov, a member of the local Crimean legislature, said. “We will decide our future ourselves.”

The ECB meanwhile is expected to refrain from cutting interest rates to a fresh record low but pressure is mounting on policy makers to take action to tighten policy in order to stave off the threat of deflation and aid the regions weak economic recovery.

Speculation that new measures could be introduced were heightened after last week’s report which showed that the annual rate of inflation in the Eurozone was unchanged at 0.8% last month, well below the ECB target of just under 2%. Some pressure was eased after following yesterday’s report which showed that private sector activity expanded at its fastest pace since 2011.

The Euro found some support from unemployment data out of France and Greece which suggested that the struggling nations could be seeing an upturn in their respective economies.

A report released by the International Labour Organisation showed that the French jobless rate fell for the first time in 2 years at the end of last year. The rate fell to 10.2% and will be a much needed boost for President Francois Hollande’s deeply unpopular government.

Greece saw its unemployment rate dip marginally to 27.5% in December, down from the 27.6% recorded in the previous month. Despite the fall the nation’s jobless rate remains more than double the Eurozone average as the impacts from a six-year long austerity fuelled recession continues to bite.

Euro (EUR) Exchange Rates

[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3732 ,
Euro,,British Pound,0.8213 ,
Euro,,Australian Dollar,1.5181 ,
Euro,,Canadian Dollar,1.5137 ,

As of 11:05 am GMT