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The EURUSD Pair On The Decline
Submitted by Tradervox 1 on Mon, 19/03/2012 - 12:35
Tradervox (Dublin) - Positive news from the US has started to affect the performance of the 17-nation currency against the dollar. Last week, the pair closed the week on a high but this is expected to change in the following few days. There have been doubts about Italy and Portugal in the Euro zone and analysts are warning of a “second Greece”, this time affecting Portugal. One of the major factors lowering the EURUSD pair is the high US bond yields. Moreover, inflation in both countries is affecting the pair considerably.
During the Asian session, the pair remained fairly calm trading at a range of 30 from a low of $1.3150 to a high of $1.3280. The currency closed the session at 1.3150. The pair is currently trading at between 1.3020 and 1.3150; with the trading at 11:36 being at $1.3154.
Some of the fundamental supporting this trend include the “Bernanke effect.” After the FOMC decided to leave the monetary policy unchanged as expected, they also gave very positive analysis of the US economy causing what analysts have called a “dollar storm.” However, the oil prices, which the Fed indicated would hamper growth, continue to do so as Iranian conflicts heats up. The US bonds yields are on the rise and this is consequently strengthening the dollar. This has had great effect on the USDJPY pair but the EURUSD has broken its resistance too.
Despite IMF approving the second Greek bailout money, negative sentiments about Portugal and Italy have continued to cloud the market. Despite Greece completing its PSI, there is a higher chance of another default as the new bonds are selling at quarter of a euro in the market. The Chinese housing slump is also causing problems for the euro and the Asian market as well. Further, the euro is being haunted by inflation crisis which Draghi, the ECB president, has that he has the machinery to fight.
These negative reports from the euro zone and the positive results from the US have lowered the EURUSD pair and it is expected to continue over the next few days.
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