Monday, 14 Jun 2010

Euro Up Broadly on Monday, but Trend Remains Down

The EUR rose broadly on Monday versus the majority of its rivals as European economic data eased concerns about the region's recovery and prompted a bout of EUR short-covering on increased risk appetite.

The 16-nation single currency moved further away from a recent 4-year low to hit just below 1.2300 against the US Dollar - its highest in more than a week - after better-than-expected euro zone industrial output data was released.

On the other hand, economic analysts have cautioned that the euro's downtrend remained intact as concerns about the banking sector and debt problems in the euro zone are likely to persist for some time. Commodity Futures Trading Commission data showed speculators had actually boosted their bets against the euro in the week ending June 8, although net short positions were below record levels. We should see downward corrections in the EUR/USD as a result.