Currency News: Should We Bet on USD:EUR Parity?

Currency News

While many traders are betting on the USD:EUR parity, some new developments could reverse the current trend.

Even if the overall macroeconomic conditions are currently favourable, the German industrial production in June have dropped by -1.4%  and this is due to Greece’s crisis issues and a slowdown in Chinese consumption. But this is expected only to be a temporary trend, as for European economy there are positive signals in several industries and countries, that suggest a resurge in European Countries’ economies.

The cheap euro is working and has had a large role to play in the surge in exports for both Germany & France. Moreover the Euro can profit from good data coming out of Spain with Industrial Production for June increasing by 4.5 percent, year to year; if the Eurozone data starts picking up, then according to Shailesh Mulki, Corporate Risk Manager with Western Union, the bottom in the euro exchange rate complex will be shallower than many had been expecting.

Below the Year to Date graph for EUR:USD


Source: Yahoo! Finance

The Euro to US Dollar (EUR/USD) exchange rate is likely to break out of its current narrow trading range following the publication of the US Non-Farm Payrolls report.

Nonfarm Payrolls is a monthly jobs report and considered the foremost economic indicator for the labor market in the US. Unemployment rate measures the number of individuals in the labor force without a job. Both data prints are priced highly by market participants due to the importance of the labor market in the US economy.

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