Renewed Faith in Euro

Forex markets are arguably the least predictable of all capital markets. Traders and investors must reconcile technical analysis with economic indicators with fundamental considerations, which frequently paint vastly different pictures. This week, it seems forex traders have had a collective change of heart, abandoning the USD and embracing the Euro. Traders bullish on the Euro argue that a host of economic indicators and political developments reveal the EU economy is improving as politicians prepare to enact much-need structural reforms. Additionally, money managers are now touting the Euro as a ‘defensive play,’ due in part to rising natural resource price. The Financial Times reports:

Mounting international confidence in the prospects for the eurozone was neatly encapsulated by portfolio flows data released earlier in the week, which showed the eurozone attracted net inflows into its equity and bond markets.

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