From the May 01, 2010 issue of Futures Magazine • Subscribe!

Will euro funk end?

The European Union announced its aid package to Greece in early April, but uncertainty about enactment of the plan and general weakness in other European economies will weigh on the euro in the coming months, analysts say.

Kathy Lien, director of currency research at GFT, says that the EU’s bailout plan hasn’t created much of a resolution, as Greece hasn’t activated the package, and Germany isn’t completely committed to providing this aid.



“The question will be, will the other PIIG nations [Portugal, Ireland and Italy] come up and extend their hand for aid as well,” she says. “The euro should bounce, but the bounce is probably going to be limited until these fiscal problems are officially resolved.” She expects the euro to hit $1.34 in mid-May.

Brian Dolan, chief currency strategist at Forex.com, sees the euro consolidating at a $1.32-$1.37 range, with continued sluggishness and zero recovery taking hold in the Eurozone vs. continued recovery in the U.S., Canada, Australia and developing markets.

“The Eurozone is going to emerge as the global laggard in this recovery. If we see under the $1.32 area, we’re looking for further weakness down into the $1.27-$1.28 area,” he says.

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