The euro started this week very poor. The currency currently shows weak attempts to regain its footing, but most analysts have a very negative outlook for the euro in the
Greece has taken the biggest part, so far, in reducing confidence in the shared European currency and continues to do so. Fitch Rating downgraded Greeceâs credit rating, saying:
The âB+â rating incorporates Fitchâs expectation that substantial new money will be provided to Greece by the EU and IMF and that Greek sovereign bonds will not be subject to a âsoft restructuringâ or â
And there are more problems for Greece as the country seeks another bailout, but itâs very possible some members of the European Union will be against such aid. France joined Germany in demands for restructuring of Greeceâs debt. Norway, which isnât member of the EU, said that itâs not going to provide any more help to Greece.
There are other countries, besides Greece, that can cause pessimism about Europeâs economic health. Portugal and Ireland remain an issue. Spain revealed that it has âhidden debtâ as many officially employed people werenât receiving their payment and now are going to protests and demonstrations. Outlook for Italyâs debt rating was revised by Standard and Poorâs from stable to negative:
Standard & Poor’s Ratings Services today said that it has revised its outlook on the ratings on the Republic of Italy to negative from stable to reflect its views of the heightened downside risks in the government’s debt reduction plan. At the same time, Standard & Poor’s affirmed its ‘A+’
And story doesnât end here as the economic data showed that the European economy is stalling. We are speaking not just about the indebted peripheral economies, but about major ones as well, including Germany and France. The reports of Markit Economics showed that the Purchasing Managers’ Indexes of Germany, France and the whole Eurozone unexpectedly dropped in May.
Itâs easily understandable that there is not much optimism left for the 17-nation European currency. Weâll see some important macroeconomic reports later this week, including the reports about Germanyâs GDP and inflation, and these reports may change the sentiment. But for now the outlook for the euro remains quite pessimistic.
EUR/USD currency pair may trade near 1.4000 for some time. When the currency drops down it can reach 1.3750. If the European currency would decide to go up, ignoring the sentiment and the fundamentals, it can encounter resistance at 1.4285 or at 1.4375.
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