Euro Records Mixed Results Ahead of Thursday Rate Decision
Posted on 04. Feb, 2009 by admin in Daily Euro Analysis, Euro Currency, Euro Currency News
The EUR was affected by 2 main things in yesterday’s trading. These are the global stock market rally and mixed feelings ahead of Thursday’s Interest Rate decision by the European Central Bank (ECB). The U.S. stock market rally led investors to buy-back into the EUR, and dropping the Dollar, as investors looked for returns on risky investments in Tuesday’s trading.
The EUR appreciated by 180 pips versus the USD to close at 1.3006 in yesterday’s trading. The EUR/GBP pair closed at virtually an unchanged level of 0.9036 ahead of Thursday’s Interest Rate decisions for both the Euro-Zone and Britain. Against the JPY, the EUR rose dramatically by 180 pips to close at 116.53. This was largely due to Japan’s stock market rally. Overall, the EUR, which for the past week has been sold by most traders, is seeing these sell-positions unwind and is now making a small recovery. The question is whether or not this rally will continue throughout today’s trading.
Looking ahead, the EUR today will not be receiving much support from fundamental news events. A service-based price index is expected to show that sentiment in European business will remain largely unchanged since this report’s previous release, and retail sales for the broader Euro-Zone are forecast to drop, indicating further weakness throughout the region. With recent market optimism, it is difficult to determine whether this negative news will offset the unwinding of EUR sell positions, and most analysts say that it won’t. Traders should look for a continuation of the EUR’s recent bullishness, at least in the short-term.
