In the previous European trading exchanges, the Euro lost to the US dollar as the European Central Bank held interest rates, and underlined weakness in the Euro Zone economy. Worries over automatic spending cuts and tax increases next year or the so-called fiscal cliff that sent US shares to three-month lows, likewise weighed on risk sentiment. The Greenback on the other hand rose as US exports reached a record high in September, leading to a narrowing of the country's trade deficit. In today's European trades, risk sentiment is expected to remain weak, given concerns over Greece and the US fiscal cliff.
The single currency is expected to fall versus the Buck as ECB President Mario Draghi's comments boosted bets that the central bank would cut interest rates next month. The ECB held interest rates at 0.75 percent, while citing little signs of recovering. Following its rate decision, Draghi said in a press conference that the ECB could not do anything more to help Greece with its financial problems, and did not give any assurance to Spain that the ECB's bond buying program would drive down the country’s bond yields. With markets losing momentum, the shared currency is seen to come under bearish pressure.
Meanwhile, Greece embraces another challenge despite the recent approval of the parliament over the austerity measures to enable it to receive funds to pay its debt obligation, as the European Union finance ministers said that their decision to give the indebted country financial assistance would be delayed for weeks. Because of this, Greece runs the risk of leaving the Euro Zone if it runs out of cash by November 15 when its debt repayment falls due.
As regards the Dollar, it is expected to strengthen versus the common currency as markets also tend to focus on what would happen to the fiscal cliff, causing investors to buy safe currencies such as the Greenback. It is believed by some that the fiscal cliff would push the US economy deeper into recession. Considering these factors, a sell bias is recommended for the EUR/USD pair in today’s trading exchanges.
For more news, analysis, technical charts and candlestick analysis, visit AlgosysFx Forex Trading Solutions