Euro is higher right now, gaining as some Forex traders engage in short covering. However, the 17-nation currency is still vulnerable to debt problems — in the eurozone and in the US.
For now, euro is getting a bit of a boost after some choppy trading yesterday, and a flight to safety for markets. Middle East demand has helped support the euro up until now in today’s Forex trading, but that could easily fade. Indeed, many expect that as the US session approaches, the euro will find it harder and harder to hold on to gains.
The biggest issue, as one might expect, is sovereign debt. Eurozone debt remains out of control, and there is no good plan to solve the debt crisis. On top of that, budget concerns in the US have many worried about what’s next for the world’s largest economy. All of this uncertainty means that the short covering that is helping the euro is unlikely to last as Forex traders look for safe haven soon. With politicians in Europe and the US refusing to get serious about debt issues, it will be awhile before Forex traders feel really safe.
At 14:07 local time, EUR/USD is up slightly from the open at 1.3490, moving to 1.3503. EUR/GBP is higher, up to 0.8653, up from the open at 0.8624. EUR/JPY is also higher, moving up to 104.0900, from the open at 103.7095.
If you have any questions, comments or opinions regarding the Euro,
feel free to post them using the commentary form below.