The Euro cannot catch a break these days. Last year which just ended less than a week ago was a great one for the Euro – rising above the Dollar and soaring on US woes and optimism over the relative strength in numbers that Euro was thought to have.
But the issue for some reason has not extended into the New Year and the Euro is in the midst of a technical correction amidst a plethora of positive data.
The most recent event worth noting happened yesterday when the Purchasing Managers’ survey showed that the Eurozone services sector expanded at its fastest pace in more than two years in December – news that would fuel any meaningful rally. But the great news did not translate into anything significant in the Forex.
The issue at hand here is Greece – the “G” in PIIG – and investor concerns over their struggling economy and bleak prospects. IT has become difficult for them to borrow money and are running daily life at huge deficits nearing 50% of annual GDP rates – for any country other than the US (currently at 92% of GDP), this is not good.
The market is reacting hard to the news as it is becoming more apparent that member states are not going to take money from their own pockets to bail out what was once, the pillar on intellectual and technological civilization, but what is now a troubled tourist zone.
European Central Bank members are against lending money and have not budged on Greece’s request to issue bonds – a task that requires consent since the currency is linked to 26 other countries.
If anything, what we could be witnessing with the meltdown of the Euro is the popular (i.e. the market) response to the single currency experiment. In the near term, this is not a good sign for the Euro on the Forex – something needs to change or the situation on the ground and in the markets will only get worse.
