Juaquin Almunia ignites rumors of EU intervention on the FX marketIn spite of expectations that dollar weakness is likely in the relatively near future, the euro is weakening in [B]forex trading [/B]today. The catalyst for the euro’s drop this morning is in comments made by EU Commissioner Juaquin Almunia. GFT’s [B]Boris Schlossberg[/B] comments in FX360 on the euro zone’s concern for a strong euro in forex trading at this juncture:
As we noted earlier, “[B]EZ officials are worried about the ascent of the euro[/B], and today’s not so subtle warning from Mr. Almunia suggests that officials have decided to preempt any attempts at a runaway market. The EZ authorities are clearly concerned that a move past the psychologically important 1.50 mark could trigger a wholesale liquidation of long dollar positions and open the way for a test of all time highs of 1.6036 set in July of last year. Therefore today’s comments may be [B]the start of a verbal intervention campaign to slow down the unit’s rise[/B], especially in light of possibly another weak US NFP number on Friday which would put further downward pressure on US rates and make the dollar even more vulnerable to carry trade flows.”
This verbal intervention aimed at weakening the euro in forex trading comes days after ECB president [B]Jean-Claude Trichet[/B] made comments in support of a strong U.S. dollar. Clearly, right now, euro zone officials do not want a very strong euro to derail progress made so far in economic recovery.
[B]See Also[/B]
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[li]Euro in Forex Trading[/li]Currency trading on the FX market
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