The Euro is in trouble and that is a fact. This article will not dwell on the obvious, rather this article will discuss problem areas specific to the current news of the day while at the same time provide indicators of positive movement. This article does not propose to discuss to the reader the what, why, and how of the Euro’s problems, rather it hopes to provide a primer on the Euro as indicated by recent news.
Forex News: Euro vs. Safe-Haven Currencies
The Euro tumbled and experienced significant losses as against Safe-Haven currencies. Some experts speculate that negative information coming from German sources bolstered fears about the impact on Euro zone crisis relative to the Euro as a currency. The good news is that the uproar finally died down and prices recovered. The bad news is that recovery was not enough to suppress the dip in pips. If this incident is indicative of short-term future trends then traders should pay special attention to Euro zone related news, especially those coming from Spain and Italy.
Forex News: EUR/AUD Currency Pair Hits Record Low
The EUR/AUD currency pair fell at least 65 pips. The price eventually hit a record low of 1.1852. This, following negative views related by the German Chancellor. But that is old news. What is important to understand is the fact that if, negative comments results in this much of a dip, then how much damage will the Euro suffer if the US economic indicators prove positive for the same. Simply put, this maybe a signal to abandon ship from Euro paired currencies to US paired currencies.
Forex News: Everyone Outperforms the Euro (But for How Long?)
This includes the USD, AUD, CAD, etc. Simply stated, the outlook for the Euro is so bad that traders do not only need to look out for indicators but from less than primary/principal considerations. However, analysts who look at the other side of the coin surmise that suggestive indicators, and underperforming other currencies may fuel risk appetite just enough that barriers will be disregarded. In other words, what goes down must come up, and at this point, an upward trend is ripe for the Euro. This scenario may be nearer than you think. Take into consideration the Spanish bailout, the underperforming and trending USD, plus central bank interest rate cuts across several nations.
Forex News: Fear Spreads
A good thing about the situation is that any news relative to the Euro may signal a downward or upward trend (most probably the former). The problem is, if news are bad then the Euro goes down some more. For example, another negative comment is given by a relevant world leader, other currencies go up, product/service goes down, etc. Therefore, it is about high time to level up international aid in order to prevent further escalation of the already volatile Forex market.
The situation cannot be cured by mere positive outlook. Rather significant policy adjustments, internal income generation, and external financial aid are necessary to stabilize the Euro. In addition speculative trading or jumping the gun should be dissuaded, fined if possible (but usually it is not).