The Falling Euro Faces Many Challenges Ahead

NEW YORK ( TheStreet) -- Poor relations with Russia, failing banks, a faltering recovery and the likelihood of interest rate rises elsewhere have made this summer one to forget for the eurozone.

On Tuesday, the euro hit a new low for the year against the dollar, after a poor report from the Bundesbank, Germany's central bank, undermined hopes of progress for the German economy. That dropped the value of the euro out of the lower end of its August trading range of 1.334-1.324. How far down it may go remains to be seen.

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European Central Bank President Mario Draghi will assert that a lower euro is part of a plan that should lead to greater exports and help boost businesses in the eurozone. Some critics have pointed out, however, that such a plan is not supported by recent history that shows a positive correlation between European equities and the euro.

Data from IG's technical forex platform.

Although European indexes have been risen the past few days, a correlation between that and the failing euro is less clear.

A bigger problem for the ECB is the poor performance of the eurozone's economy compared with the economies in the U.S. and the U.K. The U.S. dollar and equities have risen on positive U.S. economic news this summer, and the U.K. is on a broadly positive trend, too.

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