Euro is heading higher today, thanks in large part to position squaring. Many believe that the euro is poised to move higher, thanks to uncertainty wracking the United States and thanks to recent Bundesbank comments.
Uncertainty in the United States is leading to demand for the euro. While there is still talk of tapering soon, many are starting to think the US economic recovery is still too sluggish to warrant an end to the tapering. On top of that, there is plenty to be uncertain about for the United States. Congress is lining up for budget battles, and it looks like the appointment of the next Federal Reserve Chair is going to be a battle.
As a result, some Forex traders are turning to the euro. The eurozone is moving out of recession, and there are hopes for improvement. Plus, the Bundesbank made it clear that support of the euro doesn’t necessarily mean more easing. This reality is helping rally the euro (as a safety play amidst the wreck of emerging market and commodity currencies), as is the fact that spreads between 10-year US Treasuries and German bunds are narrowing.
At 15:39 GMT EUR/USD is up to 1.3426 from the open at 1.3335. EUR/GBP is up to 0.8565 from the open at 0.8522. EUR/JPY is up to 130.4040 from the open at 130.1100.
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