Euro slumped to a two-year low against the US dollar earlier today, starting off with a rather dramatic loss. However, things have begun looking up, at least a little, and the euro is heading higher.
Risk appetite has returned to the markets — at least for now. Right now, there is a little optimism as the news in the United States and China share reasonably good news. Even with the losses from the London Whale, JP Morgan’s earnings for quarter two beat expectations. Speculation is also that China will add more economic stimulus. With these indicators that the global economy could be supported, Forex traders are more inclined to take risks on high beta currencies like the euro.
However, there are still plenty of challenges ahead for the euro. Even though the euro is benefitting from some optimism, as well as a return to risk appetite, we can’t forget the fundamentals. There is still a sovereign debt crisis happening in the eurozone, and there is still uncertainty with regard to what’s next for the European Stability Mechanism, and with regard to long-term solutions for the 17-currency region.
At 14:31 GMT EUR/USD is up to 1.2237 from the open at 1.2203, and off a low of 1.2162. EUR/GBP is down to 0.7870 from the open at 0.7910. EUR/JPY is up to 96.9455 from the open at 96.7850.
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