Rally of Euro Doesn’t Convince Analysts

The euro rallied together with other currencies today after the Federal Reserve trimmed its economic forecasts, leading to speculations about a delay for the planned monetary tightening. Still, analysts are not convinced by the rally of the euro and think that the currency should retreat very soon.

While the shared 19-nation currency rallied on the back of the dollar’s weakness, the internal European problems should support a bearish bias of the currency. With struggling economies of the European nations, and Greece in particular, fundamentals look bleak for the euro. The fact that the Federal Reserve is still planning to hike interest rates (even if it may happen at a later date) is also detrimental for the currency.

Indeed, the euro has already given back part of its gains. It is not unlikely that the rally was just a fluke in the bear market.

EUR/USD was up from 1.0596 to 1.0870 (2.6 percent) as of 21:17 GMT today following the rally to 1.1035. EUR/GBP climbed from 0.7185 to 0.7252, and its daily high was at 0.7292. EUR/JPY advanced from 128.59 to 130.49 (1.5 percent) but retreated from the daily high of 131.59.

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