The roller-coaster ride of the euro continues and the currency slips again against the US dollar. The currency slips to its new low at $1.2465. On the other hand, the yen gained because the market players trimmed their risky Forex positions. The ECB is expected to meet later in the week and prior to this, the trimming of long positions by the market players causes risk currencies to shift southwards. The Australian dollar too slipped to its one-month low position against the US dollar whereas the yen gains amidst the worries of the Chinese slowdown. However, the Australian mining boom helped little to the country’s currency.
Analysts feel that the ECB chief Mario Draghi’s weeks ago assurance of taking all possible steps to save the euro is losing shine now. Despite making such an ambitious announcement, the ECB chief is yet to take any concrete step. His proposal or reviving the bond buying scheme is yet to take off and the German opposition against his bond buying plans seems not diluting in any way. In such a circumstance, Mario Draghi has been facing criticism only and could not do anything significant till date. The European policymaker’s meeting scheduled for the first week of September is expected to bring some positive results and ways to control the crisis situation of the euro zone.
Last week, the euro slipped from its seven-week peak position and after gaining a little on Monday, it tumbled once again. Experts feel that the currency’s such a swinging trend may alienate it from the investors in the long run. The currency may lose momentum in the market, fear most of the experts. Following the ECB comments, the currency was seen gaining momentum in the market. But when action didn’t follow the words, the currency started slipping. Strategist feel that the market now wants to see some action and the ECB now needs to jump into action and bring down the borrowing costs of the European ailing economies.
However, in the last week’s policy meeting of the U.S. Federal Reserve, the euro is expected to garner some support and it’s hopeful to get a stimulus by the next month. This may help to bolster the currency’s position in the market. The Fed Chairman’s speech at a central banker’s meeting and the solid signs of supporting the euro have encouraged many traders who are more interested in trading in the currency.
On the other hand, the September 6th’s ECB meeting is also being seen as a crucial development for the euro’s revival. The ECB is supposed to reveal its new scheme focused on lowering the debt yields of two most debt-ridden European nations Spain and Italy. The new policy is likely to be implemented in late September and market analysts are hopeful of seeing the positive results following the ECB action. However, most traders are supposed to be in a ‘wait and watch’ mood till then, they get assured that the currency is in its stable position and there won’t be a rollercoaster ride anymore.