Traders have started to use the euro as a funding currency, as foreign exchange investors are increasingly borrowing the currency to fund bets in currencies elsewhere, it has been reported by the Wall Street Journal (WSJ).The European Central Bank (ECB) interest rates are low and many investors believe they may fall further, as pressure is mounted on the bank to take action on the economic stagnation in the region. Output is estimated to have shrank in November, with the median forecast for a 0.3 percent contraction.With the joint currency showing no sign of recovering, further falls will create unusual trading conditions that promote the euro as a funding currency. According to the Wall Street Journal, this is: "The equivalent (of) nailing a 'for sale' sign on its fence."Even though it is cheaper to borrow dollars, current market conditions are not normal, and the currency rule book goes out of the window as long as the ECB props up the weak European economy.ECB interest rates are four times higher than currencies such as the dollar and the yen, which are the currencies usually used for funding. The euro's poor outlook has effectively turned trading patterns on their head.Steven Saywell, of BNP Paribas, commented in the WSJ: "Investors are looking at lower euro-zone interest rates and expectations that the euro will remain weak or weaken and that's an ideal framework to basically use the euro as a funding currency."Morgan Stanley also believes that the euro will be used in this way to buy Australian and Canadian dollars. Selling the euro will get 'carry' in other countries, where they can cash in on the returns from higher interest rates. Trades reported to the Commodity Futures Trading Commission show that this has started to happen in the markets, with the scale of speculators' bets against the euro standing at a record high.The ECB interest rates are not the only thing attracting investors to carry. The chronic eurozone worries make up for the fact that benchmark borrowing costs in the euro are higher than in the US, according to Thomas Kressin, who is head of foreign exchange operations in Europe for PIMCO.For more information on foreign exchange treasury services and risk management, visit our Corporate FX site