In regards to the Euro’s exchange rate, Draghi plainly stated “The exchange rate is not a policy target but it is important for growth and price stability,” on Monday.
If Draghi would have said something closer to “The exchange rate is a policy target” that could have caused major volatility in Monday’s market. His statement of simple acknowledgement on the other hand, is fairly neutral.
Euro rate a “downside risk”
Draghi also made it clear that the Euro’s appreciation marks a “downside risk” to inflation.
Has the Euro seen the last of it’s strength for a while?
My opinion is that the Euro may soon rebound and take off to multi-year highs. Whether that is in the next one month, 6 months, or longer, I don’t know. I think the Euro could increase in value against the Dollar in result of where the the U.S. economy seems to be heading at this time.
What do you think about the Euro’s direction. Are there any Euro trades that you have your eyes on?
A Japanese Yen update: The group of 20 (G20) meetings held last week stated there would not be a currency war. Going into the meetings there were speculations of there being severe criticism of the Yen for weakening their national currency, but they managed to escaped the expected international criticism.
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