The Euro Takes a Hit on the Money Markets

There are some words that you will not want to hear from Ewald Nowotny who is one of the ECB’s council members, and those words are that is it quite obvious that the European region as a whole needs more support financially.

However, that is exactly was he has just said, and as sure as night follows days the money markets reacted with some significant falls in the value of the Euro against many other major currencies, most noticeably GBP and the US Dollar.

As a Forex trader you are going to be faced with more than enough trading opportunities in the days and weeks ahead, more so if you tend to pair up the Euro with other currencies, and it will worth keeping in mind Ewald Nowotny’s comments as growth in the European zone has started to slow down again and become stagnant once again.

The ECB has recently been pumping cash into the Euro zone through a series of quantitative easing programme exercises, and having chosen to pump €60billion per month into the Euro zone it could be the case that figure could be increased quite significantly if his words are taken at face value.

However, quantitative easing is not going to help improve the Euro zone economies on its own, as a well thought out plan also needs to be devised that will allow for long term growth when the money printing stops, and there are several ideas being bounced around, many of which may be acted upon in the months ahead.

If the UK and the US finally do get around to increasing interest rates then that is also going to put added pressure on the Euro, and as a trader you do need to think long and hard in regards to which currencies pairings you will be placing trades on.

But it would appear if you do place trades on the right side of the Euro sooner rather than later then you are going to be able to take full advantage of its fall in value, which is something you should consider doing.

However, if you are a low risk Forex trader then it may pay dividends for you to steer well clear of the Euro and base your currency pairings on some of the more stable currencies which do of course include both GBP and the US Dollar, but always keep your options open as there are gains to be made at all times on the Forex markets.