On Friday (Oct 28), / fell, temporarily trading at 0.9859, down 0.17%.
Some 2.1 trillion worth of ultra-cheap loans to commercial banks need to be dealt with as soon as possible.
These loans are causing political and financial problems.
After borrowing at zero or even negative interest rates, commercial banks can now simply deposit that cash back in Europe for a risk-free return that increases with each deposit rate increase.
Eric Dor, director of economic studies at the IESEG School of Management in Paris, said this would net banks between 31 billion and 34.9 billion euros if deposit rates peaked between 2.5 percent and 4.5 percent.
This is scary enough at a time when millions of citizens are struggling with a cost-of-living crisis.
Worse, it means they will have little or no money to deposit in government coffers, and some European central banks may even need help from taxpayers.
Eurozone central banks will lose about 40bn next year, according to Morgan Stanley.
Lex Hoogduin, an economics professor at the University of Groningen and a former board member of the Dutch central bank, said: “The central bank continues to send money to the banks while we have to cut spending.
So this is primarily a political issue.”
Eur/USD technical indicators are pulling back after flirting with overbought readings, but remain in positive territory.
Finally, the 20 SMA has lost its bullish slope, but remains well below current levels, around 0.9830.
