When will EUR Exchange Rates Recover? (Matthew Vassallo)

The EUR has had a tough time of late, with major losses against both GBP & the USD. The economic difficulties inside the Eurozone have been well documented over the past few weeks but the key question now is not what’s happened previously but which direction EUR rates will head in next?

Whilst it is obvious that the Eurozone is lacking investor confidence, I do feel the EUR will continue to find support around 1.35. If we look closely at the economic data over the past couple of weeks, the Eurozone data has no doubt improved and this should have been reflected in EUR exchange rates. The reason it hasn’t in my opinion is that whilst the uncertainty in Greece hangs over the market it is almost impossible for the single currency to gain any sustained support or momentum.

However, a report today has indicated that a plan is being readied for Greece, with talk of a 6 month extension on their debt repayments and the ECB accepting Greek bonds as collateral if a deal is reached. Any sort of resolution is likely to bring some EUR strength and with Eurozone data improving of late, we may find the Pound struggles to breach the current highs.

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