then, what could be the main reason for the EUR fall on these days? Keep in mind there are many possibilities because all those economy countries involved on that zone. Anyway it�d be really helpful if we figure out the most important events giving this trend on this currency
The Euro dropped nearly 300 bps falling below 1.3400 for the first time since December 15th as the inflation prediction beat estimates of 1.8%. Deflation becomes a concern for the ECB and rising commodity prices on the back of an improved outlook for the global economy will alleviate those deflation concerns. However, after a brief period of consolidation the Euro could weaken as the pound strengthen against on the back of the BoE�s comments. The central bank claimed that the pound�s significant drop and falling inflation will provide stimulus to the economy which has left doubts of further easing and sent the pound up over 100 pips to test 1.5200.
how to interpret lows in interest rates from BCE and even BoE? some signals to trade with those currencies? As a mesure to recover the economy, it�d be a signal?
The tight credit markets continue to impact the economy which was evident in the employment report which showed jobless claims of 77,900 and the unemployment rate reaching the highest since 2000 at 3.6%. The troubles of the banking system may ultimately force the government to nationalize banks and start buying corporate bonds and commercial paper to improve lending to businesses and consumers. Risk aversion flows had the single currency on the run before Hawkish comments from ECB President Trichet and other committee members fueled support. The MPC leader would reaffirm his contention that the region was not at risk for deflation and that it should be disciplined and maintain its medium term perspective. The comments would reinforce earlier ones by committee member Nowotny that there are no plans for a zero interest rate policy.