Dollar rally looks set to continue

mar bonnin palmer

Last week’s Dollar rally looks set to continue again as concern over the future of the Euro zone continues to increase. The Greek concern still remains as the possibility of a default is still on the cards and question marks over where we will see growth in the Euro zone will weigh heavily on the single currency. In the last week we have seen GBP/EUR climb from 1.1780 all the way back to 1.20 and EUR/USD has slid from its high of 1.3480 down to just under 1.3200. The Euro is definitely the biggest concern for markets at the moment and a move back down for EUR/USD to 1.30 is highly likely this month.

This should be of benefit for Euro buyers and should present an opportunity for GBP/EUR to push back above 1.20 for a period this month. Orders at 1.20 would be a good idea at present and this represent good value at the moment. The only spanner in the works for Sterling will be any moves made by the Bank of England with regards to further quantitative easing. It may well be too early for additional funds to be added to the pot after the recent increase of £50 Billion, which may buy Sterling some short term room to push a little higher.

So this week look for EUR/USD lower, GBP/USD lower but too a smaller percentage than EUR/USD and the knock on effect will be a small move higher in GBP/EUR. I would also expect to see a stronger Yen across the board after its recent slide.

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Dollar rally looks set to continue

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