Last week we saw the largest weekly fall in Euro against the US dollar since June 2006 - EUR/USD fell more than 400 pips on speculation a Eurozone slowdown will force the ECB to follow the Fed’s footsteps in reducing interest rates. ECB’s Trichet warned that economic uncertainties in the Eurozone are “unusually high”.
This week will bring about a heavy slate of economic data like the US retail sales, trade balance and so on, so expect a very volatile environment in the forex markets.
We could see a Euro rebound especially if US data come in weak. Also, the OPEC Secretary-General suggested the price of oil may be shifted into Euros from USD sometime in the future.
The G7 left its statement on exchange rates essentially unchanged, saying currency rates should reflect economic fundamentals and that excessive volatility is undesirable for economic growth.
Watch my forex video from New York below:
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