With very flat data coming from Europe and news circulating that Spanish banks are voicing concerns about the ECB’S liquidity program, the EUR began to decline versus the USD. It only took one day effectively to turn the optimism that stability had been found in the EUR – into a slippery slope once again. The European Union’s M3 Money Supply data was unspectacular and the CPI figures from Germany proved gloomy. In essence investors are being weighed down by the negative prospects for any type of recovery from Europe, not only in the short term, but the long term as well. Concerns continue to be voiced about Greece and the hurdles it faces, and the European banking system as a whole, taking into account that debt issues are rampant. While Europe has certainly begun to talk about austerity, this doesn’t insure that a default cannot take place. There will be little data from the E.U. today and tomorrow German Unemployment numbers will be published. The crux of the matter for the EUR is clearly sentiment that is being affected by fear. The question is whether that fear is justified.
Written by bforex.com