Article by AlgosysFx Forex Trading Solutions
The Euro pared gains versus the US dollar in the previous European trading session prior to the announcement of the Federal Reserve to engage in another round of monetary easing to trigger economic growth in the US. Meanwhile, economic institutes reduced their respective outlooks for the Euro Zone’s largest economy, citing the impact of the debt crisis. In today’s European trades, the single currency is anticipated to rise versus the Greenback on the Fed’s announcement of QE3.
Yesterday, the Fed announced that it would buy 40 Billion Dollars of mortgage debt per month and would continue to purchase until unemployment in the US shows a marked improvement. At a press conference, Fed Chairman Ben Bernanke said: “We’re looking for ongoing, sustained improvement in the labor market. There’s not a specific number we have in mind. What we’ve seen in the last six months isn’t it.” The new round of aggressive monetary stimulus to promote job creation and bring back confidence to the US economy, is seen to weaken the Greenback against its peers.
For the shared currency, the German court’s decision that the European Stability Mechanism, the Euro Zone bailout fund, is not violating German law, is expected to continue to support it, clearing a major obstacle for the European leaders to extend financial aid to troubled Euro Zone economies. Today, the Eurogroup officials are slated to meet to discuss whether Spain should seek for financial help after the European Central Bank announced that it would purchase government bonds in unlimited quantities to drive down borrowing costs. Indications of progress are seen to support the shared currency. As such, a long position for the EUR/USD pair is suggested in today’s European exchanges.
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