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Euro Forex Market Continues to Struggle

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  • Euro Still Near Lows Against Rampant USD
  • UK Inflation Hampers GBP
  • Positive Earnings Boost Stock Market

The Euro forex market has continued to struggle through to the mid-point of the week under consistent pressure from the safe haven US Dollar. The common currency has been continually hampered of late and remains near parity while traders wait for more ECB news. In the UK, the Pound has also struggled to gain any traction with inflation data there shifting the mood in a negative manner. Stocks however moved in a positive direction as earnings seem to indicate slightly better than expected results in a very risk-averse environment. 

Euro Still Battles Against Lows

It continues to be a challenging time for those forex trading the Euro in particular. The currency hit multi-year lows and at times dropped below parity with the Dollar in recent weeks. Its most recent recovery has been curtailed today as the Dollar gains strength again amid a number of concerns not only for this major currency pair but the wider market and economy. 

The first of these which particularly impacts the Euro is the ongoing issue of Russian gas supply into Europe. Many in the bloc fear this could stop at any moment in a move that would exert even more pressure on the region economically. Politically, the landscape also continues to shift with doubts raised over the continuing leadership of the Italian Prime Minister although he remains in position for now.

Inflation Burden for Sterling

Europe has not been alone in its currency struggle. Forex brokers and traders alike have also taken note of further weakening in the British Pound. Again there are a number of factors at play. Not least of these is the ongoing battle with the EU and the leadership uncertainty caused by the resignation of Boris Johnson although the latter did positively move the Pound. The key issues for the UK presently are inflation and rising interest rates. 

It looks very likely and was confirmed in comments from Bank of England Governor Andrew Bailey, that a rate hike of at least 50 basis points will be under consideration at the August policy meeting of the bank. This is made more likely by another increase in the CPI to 9.4% for June. 

Stocks Moving Positively

Stocks have reacted positively today to corporate earnings which have been better than expected overall. Better than expected quarterly results from the likes of Netflix have helped to buoy the market which has been stringing together negative periods regularly of late. Investors and analysts alike will be hoping that this signals the bottom has finally been seen through for the market. 

Heading toward the close of the day the Nasdaq led the way forward for the major indices and is up almost 1.5% on the day. The S&P 500 is also up almost 0.5% while the Dow Jones remains level. This positive movement carries on from Tuesday and traders will be hoping it lasts throughout the remainder of the week.

Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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