Monday, 25 January 2010

EUR/USD Forecast

The EUR/USD Forecast

Author: Rob Trader
The Euro had a pretty good year in 2009 against the dollar. It began the year at 1.40430, rose all the way to 1.51440 and ended the year at 1.43330.

The reasons for this were plentiful:
  • The US economy appeared on the verge of collapse.
  • The US has a record high deficit (it still does).
  • The global economy seemed to be improving in the second half of 2009, leading to a greater appetite for risk and people leaving the dollar for the EURO.
  • Interest rates in the US were at an all time low.
However, it seems that the tables have turned momentarily, at least in this month of January. The Dollar is on the verge of breaking the 1.4000 support and the EURO is the currency that's feeling the pressure.

My euro prediction for 2010 is that the European currency will be vulnerable throughout the year and that the USD is likely to rise in relation to it. Naturally, I am no prophet and you can make your own prediction, but this is what I think for the following reasons:

1. The European Union has too many members who are in serious financial problems. All these problems weigh down on the Euro.

2. Countries like Greece and Spain, with serious financial problems and skyrocket unemployment rates are competing with countries like the Netherlands which seems to have weathered the crisis easily. How these countries come to one monetary policy is beyond me. You just can't please them all so a compromise policy is arrived at, something which won't be optimal for the Euro.

3. It seems that the US has begun to recover from the crisis and there are many who believe that interest rates in the US will rise soon. This will lead to an increase in the USD's value. This is probably what caused the EUR/USD decline that we've seen in the past 3 weeks.

4. Now that the US seems to not be on the verge of collapse, attention has turned to Europe. Some of the countries in the EU are in serious trouble and will get a lot more press and media attention. This will lead to more fear on the side of traders and a greater abandonment of the Euro.

Again, these are my thoughts. You're welcome to act on them or not. It's your choice.

About the Author:
Rob Trader - Forex Expert
Article Source: - EUR/USD Forecast

1 comment:

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