EUR/USD has dropped off from its high and has of 1.39 rebounded lower dipping below the 1.37 level this morning. I feel we’ll see a corrective movement over the coming days/weeks with it pushing back down to the 1.31 level which we hit at the beginning of last week. This move has given Sterling some impetus with the GBP/EUR cross dallying with the 1.15 level again. If you’re a buyer of EUR and seller of GBP it may be an idea to look at securing a market order around the 1.1550 level as it seems any buoyancy for Sterling is often short lived with the markets bizarre fascination with the EUR continuing. The EUR is supported with the notion that a firm plan will be put in place to ‘rescue’ the EUR by October 23rd. This has been the driver behind the surge in the EUR. However, this was dampened yesterday with Angela Merkel’s spokesman Steffan Seibert indicating that no firm solution will be unveiled. I fear it’ll be another case of delaying this magical plan that will cure all the ills in the Eurozone. Indeed, Germany may not agree to Bank recapitalisation, may not expand the EFSF (European Financial Stability Facility) or cement a new package for Greece which will leave us with yet another false dawn. I’d expect EUR crosses to be volatile towards the end of this week and especially on Monday after Sunday’s meeting.
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