Euro Expected to Remain Subdued

By ForexBrokers · Filed Under News Leave a Comment 

Forex traders have some serious thinking to do about their positions if they have a stake in the Euro right now. This currency is currently not faring particularly well and analysts are of the opinion that this state of affairs is likely to extend for a while. Meanwhile the U.S. Dollar appears to be holding its own in comparison. For those who have exposure to a Euro- Dollar pair, this equation will need to be kept in mind for the forseeable future.

Why the Euro is Down 

The Euro has been buffeted by the complexities of the bail out efforts in the Eurozone for a good number of months now. However, with Britain joining other nations including Italy and Spain in a double dip recession, the currency has received a major blow indeed. Analysts have indicated in no uncertain terms that while Britain is likely to speedily pull itself out of the recession, it is equally likely that a slowdown in all sectors will not be easy for the nation to shake off quickly. This means that a quick turnaround in fortunes is not to be expected for now.

Investors are also apprehensive about the possibility of Greece taking an anti- bailout stance. If this does happen, a disastrous default is surely on the books in the near future. As one of the major economies in the Eurozone, Greece has significant impact on the Euro as well.

The U.K. Housing Slump Plays A Role Too

The disheartening housing prices data from the U.K. adds its own burden to the mix. A dip in real estate prices coming on the heels of a rise in March has undermined confidence in this entire segment. Investors are treading with more caution than ever before, preferring to wait and watch what unfolds rather than make quick investment decisions.

In general, the trend appears to be in favor of safe haven assets that may yield low returns rather than high risk high yield ones. Clearly, safety is the primary concern on everyone’s minds and this indicates that the public is gearing up to face currency devaluation.

Forex traders should also note that the U.S. dollar has actually outperformed almost every other major currency at present. It appears that institutional investors are considering the dollar the safest currency to invest in as of now.

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