The single currency was reborn according to analysts and economists who are keeping track of the Eurozone economy with a forecasted result that the predicting Euro strength is barely enough to stand a contrary position.
The European Central bank made remarks on the single currency after giving hints on its decision not to cut interest rates in the Eurozone. The chairman of the ECB already laid much of the foundation in the coming months with his comments that the central bank will do whatever is necessary to uplift the currency’s state. This relatively means that the Euro bulls are out with striking force.
A currency investor commented that the Euro is a latent star on the rise this 2013. Although no longer considered a taboo majority would refer to it as the “closet bulls” which have not yet fully developed to reveal actual money. As the normalisation process takes place, a good number of investors expect substantial highs by the year’s end. Similarly many other analysts are already giving their forecasted opinions this year such that many reluctantly agreed that the single currency will rise to $1.35 in the future.
Yet the question on how far the recent gains in the euro due to its technicalities in trading is still very much a controversy and a highly debatable issue. Many investors say that the Euro has been rising in part due to fact that traders have shorted the single currency at eh start of the year.
Perhaps the subject regarding “short squeeze” resulted an initial optimism, the real score is whether or not long-term buyers will finally go back to the Eurozone. Surprisingly, the Euro received a positive boost earlier this month after Japan agreed to purchase bonds issued by the European Stability Mechanism.
Still there is a lot of bullishness on the Euro which led to warnings of various risks later this financial year that could prove disastrous on the Eurozone which includes the US hinting to stop its bond-purchasing programme of monetary easing which is relatively good for the dollar but ironically bad for the euro-dollar tandem.
Another foreign currency analyst at the USB gave his remarks that the Euro will continue to weaken as the US is facing an impending fiscal cliff by the end of February. The optimism over the ECB chairman’s comments that the Eurozone will get back on its feet this year is rather quite shallow of a wishful thought when compared to the continued rise of other developed countries. Ironically the unemployment rate in the Eurozone hit a record high in the preceding week.
Yet, some investors simply keep their fingers crossed by purchasing the Euro as a non-conventional way to profit from the bull market rally since the start of the year, regardless of the significance of the basic fundamentals of the currency’s economic technicalities. Along with other risk related currencies such as Canadian and Australian dollars already coming up strong in the past few months, the Euro however is still considered as the more undervalued currency at present.