Euro to remain subdued

27 June, 2018

After 3 straight days of gains the Euro has hit a wall against its US counterpart and according to one analyst the currency may remain subdued for some time.

Earlier in the year there were hopes that the European Central Bank would start winding back their stimulus program as the economy gathered steam but now with an immigration crisis surrounding the block as well as political instability in Germany the ECB may continue to flood the Eurozone with Euro’s for some time in order to shore up the economy.

"There had been such high hopes amongst FX market participants that ambitious euro zone reforms would strengthen the structural stability of the single currency. In view of the government crisis in Germany hopes of this nature have been dashed," says Esther Reichelt, an analyst at Germany's Commerzbank .

 "It is more likely that the differences within the Eurozone will become more obvious as a result of the migrant question." He added.

A potential trade war brewing between China and the US is also expected to weigh on the European currency as investors  look to the safety of the US dollar and Mr Reichelt said even if this doesn’t eventuate, the Euro will come under pressure as the week unfolds.

"Even without the risks of a trade war, I see more downside risks for the euro over the coming days," he added.


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