Article by AlgosysFx Forex Trading Solutions
As the Euro area peripheral nations are at best halfway through correcting the economic imbalances that helped cause the debt crisis, the European currency advanced by 8 pips versus its American complement. The pressing on with structural reforms and adjustments, both in the periphery and the core, have already taken places to a significant degree.
The Euro is likely to persist to appreciate seeing that policymakers in the struggling nations of Europe’s periphery are trying to rewire their economies to generate the growth they need to pay their debts. The European Union and the International Monetary Fund have pledged at least 393 Billion Euros in aid to Greece, Ireland, Portugal and Spain to help them pay their bills while they implement reforms. Moody’s noted progress in some countries’ trade balances and labor competitiveness.
Meanwhile, although US consumer sentiment improved in early August to the highest in three months as sales at retailers and low mortgage rates spurred Americans to boost their buying plans, the disappointing growth and hiring in the spring deters a continued concern about the outlook of the US economy. With stubbornly high unemployment and a weaker global economic picture, some analysts have raised their expectations that the Federal Reserve could launch a new round of bond buying to help prop up the economy.
Hence, the competitiveness gains in the Euro area periphery that seems to have come about as a result of improvements in productivity versus the concerns about jobs and growth in the US accordingly sees that a buy position be apt for the EUR/USD pair.
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