Article by AlgosysFx Forex Trading Solutions
In yesterday’s European trading exchanges, the Euro was slightly boosted by positive figures coming from the French Industrial Production and Sentix Investor Confidence reports. The US dollar on the other hand dropped as Consumer Credit posted its first drop since August 2011. In today’s European trades, a turnaround of events is likely, as traders await the decision of the German higher court that could spell trouble for Europe in the event of an adverse judgement.
Tomorrow’s events are seen to add pressure to the single currency. The Greek leaders are set to meet for the second time after they disagree on the spending cuts required by the country’s international lenders in return for the next tranche of rescue funds. Greece’s progress would be discussed in the upcoming meeting of the Eurogroup officials in Cyprus. A more important event tomorrow is the ruling of the German Constitutional Court on the legality of the European Stability Mechanism, the Euro Zone’s bailout fund. Germany is the biggest contributor to the region’s rescue funds and an unfavorable decision would be a big blow to the ECB and the European leaders.
In the US, the Federal Reserve policy makers are also set to meet for their two-day policy meeting. At the Jackson Hole Symposium, it could be recalled that the Fed Chairman Ben Bernanke addressed the unemployment rate in the US as a grave concern, boosting speculations that the central bank would take on measures to spur economic growth. But considering the significant risk to the shared currency should the German high court rule against the ESM, traders seem to consider this as more bothersome. As such, a short position is suggested for the EUR/USD pair in today’s trading exchanges.
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