Trading yesterday took the euro down to 1.2163, a level last seen in 2012.
As positive US data was revealed with a GDP figure of 5% well above expectations of 4.3% and the Eurozone deals with Greece’s election crisis, it is the euro that is suffering.
Falling 0.3% against the dollar, the single currency is dealing with conflict within the bloc. Greece is on the cusp of having to declare the snap election if the presidential candidate does not win in the third round of parliamentary votes being held next week. Yesterday, the official candidate, Stavros Dimas, had better results in the second round but still did not achieve the requisite number of votes to avert round 3 on 29 Dec. If the election takes place there is a risk that the Syriza party would take power; a party that opposes the bail-out and austerity policies brought in by the central bank.
Mario Draghi, president of the ECB also faces opposition from Germany, the strongest country in the Eurozone, against his instigation of full-on quantitative easing expected to happen next year. Due to the conservative approach of Germany, Draghi has had to tread carefully in introducing QE policies, holding back on sovereign bond buying as part of his asset purchase programme to help boost the euro economy.
Aiming to raise the balance of Europe to 1 trillion euros next year and meet its inflation target of below, but close to, 2%, the ECB are also under threat of oil price declines, which is adding to deflationary pressures and causing even more caution from the German Bundesbank. As share prices rise across European indices and the euro falls against a basket of currencies, 2015 looks to be an interesting year of change and opportunities within the Eurozone.
MT4 chart - weekly: EURUSD
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