The Euro has undergone an impressive rally since June when it was teetering on the edge of the 1.2000$ and actually broke it for a while on the way down, following the Greek financial mess and the huge EU bailout package which was announced. Since that time, the Euro has regained significant ground, climbing to nearly 1.3000$, causing some pundits to wonder whether this is just the beginning of a long term upward trend or whether the Euro is close to its limit for now and is headed into another decline.
Before I give you my opinion, I’d like you to watch an interesting technical analysis of the EUR/USD conducted by Adam Hewison, former professional trader. Adam analyzes the EUR/USD across multiple time frames and makes his prediction for the future. It’s a free video so check it out: Adam Hewison on the Euro in the Near Future.
I highly recommend signing up for Adam’s videos. I follow what he says closely and his videos just deliver.
As for my own take on the future of the Euro, I’d like to leave the technical aspect for a moment and focus on the fundamentals. So, the Euro recovered a bit. So what? Nothing has changed in the financial conditions of the Eurozone… at least, not yet. We still need to see if the austerity measures by Greece and other troubled Eurozone members will even work. I’m not sure they will be enough. I stand by my Euro prediction for 2010 that this will be a bad year for the Euro.
All it takes is one setback, one bit of bad financial news and the Euro will dive. It’s not really recovered, it’s just enjoying a bit of upward momentum because no catastrohpe has happened… yet.
In addition, I have another explanation of why the Euro is enjoying this rally: the Soccer World Cup.
During this month long World Cup, all of Europe has gotten into a new kind of mood, a festive one. I’ve spent this time in Amsterdam, the Netherland (who finished second after they were beaten by Spain in the final) and the mood here was incredible. It’s upbeat, positive, the weather is good, lots of tourists and so on. This good mood may play a part in the Euro’s recovery. The World Cup dominated the news here, erasing everything else. Now that it’s over, it’s time to get back to the more sombre mood of the reality here. And it’s not pretty.
Europe is undergoing a crisis. It’s far from over. In the long term, the Euro is still headed down. That’s my opinion. Click here to check out what Adam Hewison thinks
