Forex News: Technical Recession Can't Keep the Euro Down
So the Euro-zone has entered a technical recession.
That seemed to be the attitude in currency markets as the Euro stayed higher against the US Dollar despite the report of a second quarter of a contracting economy. The GDP release was as expected, and therefore did not weigh on the single currency; instead comments from EU’s Rehn about a solution to Greece’s debt and higher than expected results for the French and Italian GDP kept demand for the Euro high.
European Union Economy Minister Rehn said work is ongoing on Greek debt sustainability and suggested that the European economy may have bottomed out. Rehn said there is no reason to doubt IMF involvement in the Greek bailout, and cutting loan rates is one way to guarantee Greece stability. Also, ECB member Asmussen said the ECB is working on a solution for Greece.
The ECB’s quarterly survey was less optimistic on the future of the Euro economy. The forecast for 2012 was cut to -0.5% from -0.3%, the 2013 economic growth forecast was cut to 0.3% from 0.6%. The survey also reported higher expectations for inflation in 2012 and 2013.
The Euro is now trading around 1.2767 against the US Dollar in forex markets. Resistance could be provided by a former support near 1.2824, and support might be provided by a 2-month low at 1.2659.
The big mover in today’s session was the Yen, which has weakened significantly following the announcement of tomorrow’s dissolution of the parliament. The projected winner of the upcoming election, opposition leader Abe, is expected to raise pressure on the BoJ to cut interest rates. That’s why the Yen has risen nearly 200 points against the US Dollar and moved above 81.00 for the first time in six months. Responding to expectations, Economy Minister Maehara said Abe’s comments may mislead markets, and a 3% inflation goal is not appropriate.
EURUSD Daily: November 15, 2012
--- Written by Benjamin Spier, DailyFX Research
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