The single currency remains near the 8-month minimum versus the greenback at $1.3313 hit earlier today and close to the 10-year minimum against Japanese yen at 101.92 hit on September 26.
The market is concerned about the possibility of Greece’s default and the health of the euro zone's banking sector.
Coming events
The focus this week will be on the monetary policy and growth. The European Central Bank meets on Thursday, October 6. Some investors are looking forward to a 25-basis-point rate cut even despite high September inflation data. The ECB President Jean-Claude Trichet speaks on Tuesday, October 4, at 1:00 pm GMT.
It’s also necessary to note that today begins 2-day meeting of the European finance ministers. The Ecofin is expected to put pressure on Greece to implement agreed structural reforms and to discuss the ways of increasing the European Financial Stability Facility’s (EFSF) financial firepower.
The decision about granting Greece the sixth tranche of the bailout – 8 billion-euro ($11 billion) – is postponed to the middle of October as the nation tries to reduce its huge budget shortfall.
Bearish forecasts
UBS: EUR/USD shorts will increase.
ING: euro will fall to $1.30/1.31.
Commerzbank: the pair will slide down to $1.2860 (2010 minimum) and $1.2000. Key resistance in the short term is seen at $1.3937 (September 15 maximum).
Published by FBS Holdings © 2011
Greece announced that it plans to accelerate budget cuts in order to obtain the next tranche of bailout. Additional austerity measures announced yesterday include a 20% cut in pensions of more than 1,200 euro ($1,627) a month and lower wages for 30,000 state employees.
