EUR Outlook : Euro-Zone Campaign
October 19th, 2009 Posted in Euro-Zone
Name: Natalie
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The European currency fell against the Yen and U.S dollar in Monday trading, as traders sold the common currency to lock in profits amid speculation European authorities may face increasing pressure to rein in the unit’s recent strength. The 16-nation currency weakened after the Euro-group policy makers said last week the currency’s gains will be discussed at a gathering of finance ministers today.
The European currency has appreciated about 6% against the USD so far this year and at the end of last week it neared $1.50 a level unseen since August last year. As the low-yielding Dollar has been sold as a funding currency for higher-yielding and higher-growth assets the EUR has gained.
Investors are concerned that the Euro-Zone finance ministers convening at a regular meeting later in the day in Luxembourg could fire warning shots over EUR strength. This could ramp up pressure on the European Central Bank (ECB) to consider steps to curb any further rises in the currency, analysts said.
The EUR could retreat further to $1.4800 later in the day, if profit-taking mounts ahead of the Euro-Zone finance ministers’ meeting, traders said.
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Tags: Euro-Zone economy, eurodollar, European Central Bank (ECB)
