Volatility sessions of euro currency
The euro currency observed a week on the high note. The euro is currently at the rate of 1.4062 against US dollar. This rate was up by 0.87% from the trading of the last week. Moreover the currency observed the upward change of 0.81% from the euro currency of last week.
But this week is likely to be volatile since the European Central Bank (ECB) is set to issue the most awaited interest rates for the euro zone. So the currency will depend on the bank’s decision and the market will react accordingly. The Economic Cooperation and Development (OECD), a European organization is pursuing the ECB to provide financial stimulus to the economy and asking the bank to provide zero borrowing costs for the economy. The major reason reflected here to cut interest rates is to check the onset of deflation in the economy. The CPI expected estimate of prices is negative 0.2% in June which is the lowest ever since 1991. The latest PPI report continues to build up the pressure on consumer prices in euro zone with forecasts predicting that wholesale inflation to dip by -5.6%. This can result in long term stagnation for the business and consumers in the economy.
ECB has put in various corrective measures to improve the businesses of the economy but in vain. They were inadequate in nature. It gave 442 billion euro in a year bank loan as a means to improve the liquidity crunch in the market and a bond buying scheme of 60 billion in the economy. But still it was unsure if the banks would extend the same benefits to the consumers since the banks reported to have losses around $1.1 trillion in the subprime crises of the global economy according to the IMF. Moreover Latvia also suffered the currency devaluation which will leave an impact on the euro currency.
But the figures of the economic confidence of euro zone sprang up in the month of June as the consumers are showing confidence after the efforts are being put up by the government for providing fiscal remedies. But after all these measures, it is still a doubt if the economy will continue to grow and sustain itself on its own after there is no stimulus. Moreover the number of people without job continued to rise and currently its rate rose to 8.3% in June being 8.2% in May. The German retail sales also dropped by 1.6%. Euro zone retail sales were down by 2.6% by the year end in May. So the traders are monitoring the current situation in the economy and are suggested to wisely invest. The currency till now bears a fundamental outlook of bearish trend.

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