How much is the Euro damaged by the ECB?

USD and EURIt seems that the new year has once again brought the bears out in regards to the latest online forex trading sentiment. The Euro has lost any previous gains made against the dollar due to a larger fall in European Union industrial output than previously predicted.

This statistical pullback is highlighted by the continued record-high unemployment in countries such as Spain and Greece. Although unemployment remains one of the most bearish economic barometers for the Euro, weak private sector output serves to further illustrate the fragile state of this multinational economy.

One of the main issues seen by many forex investors is the rather worrying “wait and see” approach taken by the ECB which is still downplaying any possibility of a rate cut. However, most astute traders see this policy as a way to leave the administrative door open for possible cuts further afield should the downturn begin to noticeably affect price stability.

This situation can be seen in one of two ways. The ECB report due out later this week may in fact give a particularly neutral medium-term outlook for the economic recovery. This is perceived as mainly having to do with key policymakers in struggling nations more apt to make the necessary steps to counteract a protracted recession. While some online forex traders may view this as a sign of change to come, others remain skeptical and decidedly bearish on the longer term prospects of the Euro’s relationship to the dollar and the pound.

Many online traders have take a conservative approach, as they view no quick fix for the European-wide economy. Some traders see the dollar as a hedge against a hobbling Euro for the shorter term due such volatility. Ultimately, many forex traders will await any hints of an ECB rate cut on the horizon.

Leave a Reply