The Euro is widely expected to remain under selling pressure for the next week as investors and traders are uncertain about the euro zone sovereign debt crises. Many analysts are advising investors to short the single currency.
There are lots of factors in Europe which have an immense negative impact on Euro, for instance Moody recently revised and reduced its rating for Ireland has contributed substantially in decline of the Euro. Moreover budget warning of International Monetary Fund for Ireland are also creating more uncertainty among investors.
European leaders have decided to find a permanent solution which will take effect probably form mid 2013. However investors were expecting more aggressive approach by European leaders to address the euro zone sovereign debt situation. Measures like issuing joint European sovereign bonds and increase in European Financial Stability Facility were expected by most analysts for the region’s financial crisis.
Chief investment officer James Dailey from TEAM Asset Strategy Fund commented, “There are plenty of potential catalysts for the euro to go lower. And we might see the euro hit $1.26 over the next two weeks or so.” Dailey believes that the Euro will decline to 1.26 versus the greenback and is advising to take short positions in the single currency.
The Euro dropped to its lowest in last week at 1.3133 against the US dollar on Friday however it recovered to $1.3181 by the end of the Friday’s trading sessions. In the last week the Euro faced the correction of 0.2 percent.
Global head of FX strategy at Citi, Steven Englander also anticipates a bearish trend for the single currency and stated, “The lack of liquidity as year-end approaches and the difficulties in coming up with comprehensive solutions on sovereign debt make us prefer euro shorts to longs for the time being.”
