Federal Reserve trying to get democrats and republicans closer

Washington US Federal ReserveThis week’s online Forex trading news has been highlighted primarily by the fiscal conditions currently underpinning the Eurozone, with a moderate consideration regarding investors’ stances on the US dollar.

While the primary concern is the United States government’s approach to the looming deficit cliff, the Federal Reserve seems to have made progress towards the latter part of the week which will help bridge the gap between the democrats and republicans. However, in Europe near term worries continue to daunt any real gains in the value of the Euro.

One of the main concerns is the latest tranche of bailout funds destined for Greece. This is nearly unanimously expected to be approved shortly, and in no small part due to chancellor Merkel’s looming German elections in a few months’ time. While this was foreseen by most online Forex traders, Spain is another concern entirely. The highly indebted country is rumoured to be potentially seeking a full-blow ECB bailout.

Adding to these jitters is the fact that Spain has already officially requested a bailout for its banking sector. Many view a full sovereign bailout as the next logical step. Fueling concerns is the austerity measures which would be needed to be adhered to in an already fragile country. As Spain represents a sizable portion of the Eurozone’s economy, there are fears that such austerity-induced domestic instability could possibly usher in a new era of fiscal turmoil within the region.

For these reasons, the near term analyses for the Euro in Forex trading is seen as neutral to bullish while the US dollar has gained momentum following domestic progress within bipartisan negotiations.

Many traders will still seek to capitalise on the dollar’s rise although any trades may tend to be short-lived as the government is still far from coming to a decisive fiscal compromise. This rise could also be seen as a potential hedge against what continues to be a stagnant market for the Euro in Forex trading.

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