The euro strengthened versus the US dollar on Thursday, but it is still far from the 14-month low because of the anticipations of the debt crisis in the euro area and the influence of the budget measures on the economic growth in the region.
The euro advance is likely to be curbed as the investors are sure to use the rallies in order to sell the common currency. “Financial markets on the whole are gradually calming down, but a tendency for the euro is still sliding, said Kosuke Hanao from the HSBC, although a panic selling of the euro at the moment has stopped, the risk of decline still exists”.
The euro gained against the US dollar by 0.3% to $1,2666, but it is still trading around a 14-month minimum of $1,25, hit last week. This mark is expected to become a psychological support level for the currency in the near term but some market players suppose the euro can fall below $1,2400, like in 2008. The euro was not able to keep the positions got on Wednesday, in spite of the optimism caused by the news about the expenses reducing in Spain and a successful selling of the bonds in Portugal.
“The next issue is about the measures the countries overloaded by debts will take to reduce the budget deficit, stated Jun Kato from Shinkin Asset Management. People are still observing the Europe but it is expected that the factors determining the trading will again be the fundamental indicators, taking into account good economic indicators in the USA and stable stock markets”.