About craving for risk and prospects of euro | Inside Forex trading

Last week, the the euro rally, triggered by the ECB meeting, slowed down because of the Eurogroup chairman Jean-Claude Juncker. Let me remind you, Juncker, who is prime minister of Luxembourg and head of the councl of the eurozone finance ministers at the same time, said that the single currency has reached ?dangerous? high. At the time of Juncker?s statement, EURUSD was trading near 1.3400, and comments of the politician ?forced ??it (January 15-16) to reach the level 1.3260, as a result of two-day decline.

Markets are worried, if view Juncker does not reflect the official position of the European authorities, who fear that a stronger euro will hurt eurozone export position, just as the strong yen had just been a ?curse? of Japan? And if so, will that European officials go in the footsteps of the Japanese government, putting pressure on the ECB to make the central bank to reduce the rate of a common currency?

But the leadership of the ECB has not confirmed the fears of Mr Juncker. On the contrary, ECB Governing Council member, the head of Bank of Austria Ewald Nowotny told reporters that he believes the euro overvalued. Tension eased, and the next day, Thursday, the euro rushed up ? but only to weaken again on Friday.

The question of whether the continued strengthening of the single currency is still relevant. It would seem that past human disturbance has weakened: anxiety about the periphery of settled, peripheral debt auctions show a significant decline in yield, heard no talk about the treatment of Spain for help. Maybe a lack of traction to the risk hampers the growth of the euro?

Yes, as long as the financial markets craving ?of players for risk can not be realized in full: thoughts of investors are gradually beginning to focus on the next round of confrontation between Republicans and Democrats in the U.S. Congress. The main topic of debate now will not only reduce federal spending, but it will ?also be the issue of increasing of the ?ceiling? of debt. Borrowing limit will be exhausted by the middle of February ? beginning of March, so to prevent a technical default U.S. remains month and a half. Fitch Ratings has issued a warning about the possibility of lowering the credit rating of the U.S. with a top mark of AAA (recall that while the highest rating deprive States decided only agency S & P). President Barack Obama and Federal Reserve Chairman Ben Bernanke said that America does not have a real alternative to a regular increase of ?ceiling?, and called on Congress to hurry.

I have no doubt that the outcome of negotiations between the contending parties will be positive and the road to new borrowing will be opened. But the return to the risk of traction does not guarantee the pair EURUSD continued growth. The fact that many analysts have recently noted that formed during the crisis dependence ?good news ? the euro,? begins to falter. In January, we have repeatedly seen on the output statistics from the U.S. a strong pair EURUSD has not grown, but declined. Perhaps it is time to rebuild traders to play by the new rules? Regardless of the answer to this question, the prospects for further growth in the euro remains uncertain. And it is a reason to encourage investors to special care.

Source: http://blog.forex4you.com/about-craving-for-risk-and-prospects-of-euro/

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