Mood Swings for EUR/USD

This has officially been the most volatile week for the global currency trading market since the Asian financial crisis of the late ‘90s. Interday trading of EUR/USD went through significant swings as the dollar gained ground on word that the U.S. Federal Reserve had chosen not to change interest rates, only to plummet against the euro on the shocking news that the federal government was rescuing American International Group with an $85 billion loan. The Bank of Japan’s decision to hold interests rates at their current level of 0.50% also contributed to the dollar’s decline in today’s forex trading. EUR/USD moved from 1.4121 yesterday to 1.4348 as of 4:18PM EST today.

Looking ahead, a bearish interest rate environment for the euro suggests that the dollar may actually gain ground despite perilous conditions in the U.S. financial market. A survey released today by Bloomberg also found forex analysts to be optimistic about the dollar, which they expect to benefit from a slowdown in European economic growth.

Tags: , September 17th, 2008 Posted in Forex

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