Forecast – euro dollar exchange rate decreases

Forecast of USD and EUR on the week

In brief: The exchange rate of major currencies - the dollar the euro will continue to rise against the euro and weak reporting a positive trend in the U.S..

Exchange rate euro can not be restored next week in a row. Another series of offerings of U.S. Treasury could support dollar this week. Thus, the euro-dollar on Monday morning fell by almost two figures from the opening at around 1.2563 to 1.2375 minimum, thereby returning to a designated earlier range of 1.21-1.24. The dollar strengthened across currencies except the yen, while, judging by evrovym crosses, the euro is falling even faster pace.

Analytical tape write that the euro’s weakness could be provoked by the news that the Spanish government saved from bankruptcy by Bank CajaSur weekend. Nevertheless, it is noted that the bankrupt bank was small. Theme of the crisis of sovereign debt in the analytical tapes gradually begins substitute for another: it is assumed that the dollar will show growth for the reason that the U.S. is expected to enjoy rapid economic growth compared with other developed countries. However, this approach completely ignores the fact that high rates of economic growth in the U.S. no more than a consequence of the astronomical amount of budget deficit, much larger than the average for the euro area (in 2009 fingodu U.S. budget deficit 1.4 trillion. Dollars, or 10% of GDP, 2010 fingodu expected deficit of 1.55 trillion. dollars, or 10.6% GDP). At the same time, followed by many European countries, Germany is the introduction of conservation programs from next year. The new British government is going to release its proposals to reduce the budget deficit to 6.2 billion pounds.

It is significant that, with the largest in the world in absolute amount of the budget deficit, the U.S. does not intend to reduce its public spending. This is not surprising, because if the U.S. will come to this step, it quickly will result in a cessation of economic growth or even a return to recession. However, thanks to cheap euro, much of the fruits of economic recovery in the world now goes to the euro area. But all this reasoning, which may affect the future of the euro only in the long term. While the picture remains very speculative, the market simply consolidated after a large-scale motion, which passed in the last month. We assume that the euro will decline further to 1.22 marks, although the current ultra-high volatility, we do not rule out another move towards 1.25 before retesting lows year. The increase in the dollar will contribute to placing U.S. Treasury securities that pass this week: tomorrow, $ 42 billion 2-year notes, Wednesday $ 40 billion 5-year notes on Thursday $ 31 billion 7-year notes.

Ukrainian Globalist
2010-05-24 12:28, Currency news.

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