ECB Head Mario Draghi said last week that “We will closely monitor conditions in the money markets and their potential impact on the stance of our monetary policy, which will remain accommodative with the full allotment mode of liquidity provision,”.
Since the ECB will “closely monitor” the money markets, it is safe to say that the Euro may not continue upward with the same momentum that it was. Depending on what happens this week, we could see the Euro continue to slide down, or a recovery.
“We don’t know yet how we’re going to get out of the crisis,” Wolfgang Franz, the chairman of the council of economic advisers to German Chancellor Angela Merkel, said in an interview recently.
Euro group meetings Monday have a strong focus on a possible Cyprus bailout.
An election in Italy is also in the spot light.
Spain is coming under examination from credit raters and faces the possibility of being downgraded again.
All of this can affect the value of the Euro. With so many things happening at once, it may take some time for the market to digestive the data. This week could be a key week in determining the direction of the Euro for the rest of this Quarter. After coming off of 2011 highs, the EUR/USD looks to be collapsing. If we see a rebound this week up to 1.36 levels, a bullish follow through is much more likely.
Draghi is speaking again on Tuesday.
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