Another Bad Week for Euro?

  March 04th, 2013 at 18:47
 Focus on 50-euro notesThe euro was no feeling well recently. The Forex market was in a risk aversion mode, driving traders away from the currency. What this week holds for the euro? In fact, market analysts think nothing good.

The major event for the shared 17-nation currency this week is the meeting of the European Central Bank. The bank is not expected to change its monetary policy, so traders’ attention will be focused on the press-conference after the meeting. The euro may rally if ECB President Mario Draghi will not say anything particularly unpleasant. Yet over longer term, passiveness of the central bank would not be positive for the currency. And some specialists think that the bank will be forced to cut interest rates this year and rather soon. Such outlook is not good for the euro.

Today’s macroeconomic data from Europe was mixed. The Producer Price Index posted gain and Spanish unemployment contracted more than was hoped for by investors. Yet Sentix Investor Confidence fell much more than was expected. Other economic reports this week are not expected to be particularly good. Most notably, economists predict that the revised GDP figure will confirm that the eurozone remains in recession. It is clear that Europe did not resolve its problems yet and this is negative for the euro.

Of course, last week’s Italian election will continue to spoil prospects for the common currency of the eurozone. In fact, the drop of the Sentix confidence index was blamed on the outcome of the vote as the divided parliament does not bode well for Italy’s future.

Experts are pessimistic about the euro. Both DailyFX and Forex Crunch said that the outlook for the euro is bearish

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