Fundamental Forecast for Euro: Bearish
- The continued languish within the European economy has become one of the world’s most vulnerable pressure points. As panic continues to increase around China, this vulnerability becomes even more exposed.
- Euro has been showing strength on risk aversion as carry trades unwind, but should an element of normalcy be restored, the short EUR/USD trade could become attractive once again, as investors anticipate the inevitable and eventual increase to European QE.
- However you’re trading the Euro over the coming months, it’s probably going to be risky. Get comfortable with your risk management in order to avoid the dreaded margin calls that traders often face in these circumstances. Our Traits of Successful Traders research can help.
The first week of the year has brought just the most recent allotment of bad data out of the Euro-zone. This week has seen disappointments in German inflation, German unemployment and Euro zone inflation figures. So, not a great week on the data front for Europe. But this isn’t really a surprise, is it? This is just more of the same that much of the world has become accustomed to. Europe is contracting. The bigger question here revolves around the ECB, and what they might actually do at their next policy meeting. Because after the disappointment that the ECB brought to markets in December, numerous questions have remained as to what they may actually do.