Future of the euro and the nervous markets

The future of the euro worries stopped caring bulls

In brief: The exchange rate euro remains number one issue for bankers and currency traders. The future of the euro will depend on hundreds of factors.

Exchange rate euro becomes unpredictable. After contemplating a dizzying dives euros for 4-year lows in the confrontation with the dollar, most observers and participants in the foreign exchange market are set not a rhetorical question, what can be further trajectory of the single European currency. A couple of weeks ago in his review, I pointed out the fundamental level of $ 1.20, significantly below which the euro will not fall now.

Losing half a year 30 pieces or about 20% weight in the fight against the reserve currency, the euro from a technical point of view, thoroughly immersed in oversold zone. An additional factor, signaling the approaching rebound euro is, no matter how it may seem strange, general pessimism about the prospects for Euro-currency. Often in such cases, the fears and concerns are greatly exaggerated. First, governments of sovereign debt ceiling dangerous (Greece, Spain, Portugal) in a matter of urgency through their parliaments had a set of measures aimed at cutting the budget and reducing deficits. These activities generally increased the level of investor confidence in the securities of the debtors, as evidenced by the faster growth of stock indices in southern Europe. Secondly, the Superfund size of 750 billion euro, created under the auspices of the EU and the IMF, from which credits may be directed to support the financial systems of countries of concern, according to most financial experts is more than adequate for solving such problems. Thirdly, as it turned out recent economic performance of Greece, Portugal, Spain and several other countries, the alarming is not so bad as it was commonly believed. At least, unemployment is declining everywhere, perhaps the fastest in the last five years of growth, and household expenditures show progressive, albeit uneven, growth. It is symptomatic that the head of the ECB Jean-Claude Trichet at a press conference yesterday following the meeting of the Governing Board of the bank increased the outlook for euro zone GDP growth for the current year in the range of 0,7-1,3% instead of previous estimates of growth in the range of 0,4 – 1,2%.

In yesterday’s interview with America’s largest business television channel CNBC legendary investor Jim Rogers just said: “The market is now so much negative about the euro and such an incredible number evromedvedey that definitely points to rally very soon.” In this context, Rogers admitted that he is actively buying euros on the last failure. Agreed with him, Audrey Childe-Freeman currency strategist at Brown Brothers Harriman. In his note to clients, she said: “We see a number of steps in a constructive direction, and investors should be prepared for a potential rebound of euromarket.” If you use technical analysis, then the first real target pair euro-dollar supports a range of $ 1,24-1,26. However, one can not exclude a more powerful reverse movement in the area of $ 1,32-1,34 that roughly corresponds to 50% rebound from the lowest point of incidence. In any case, the euro is ripe for a rebound.

Ukrainian Globalist
2010-06-11 12:46, Currency news.

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