ECB Will Have to Act Aggressively to Revive Economy

Pressure could be on the Euro this week as recently releasedeconomic numbers are still indicating a deepening and wideningrecession in the Euro Zone economy. The recent weakness is just furtherproof that sitting on your hands doesn’t work when it comes tostimulating an economy. Investors are still voicing there disgust atthe pace at which the European Central Bank has acted toward providingstimulus to the economy whether through interest rate cuts or economicstimulus.

Pressure could be on the Euro this week as recently released economic numbers are still indicating a deepening and widening recession in the Euro Zone economy. The recent weakness is just further proof that sitting on your hands doesn’t work when it comes to stimulating an economy. Investors are still voicing there disgust at the pace at which the European Central Bank has acted toward providing stimulus to the economy whether through interest rate cuts or economic stimulus.

The recent rally in the Euro is suspect as it actually represented a weak Dollar rather than a stronger Euro. The short-covering rally was triggered by the news that the Fed would provide additional liquidity to the U.S. economy by purchasing bonds and mortgages. Now that the EUR USD market appears to have absorbed all of the initial euphoria, conditions are stabilizing and traders are once again focusing on economic conditions. A weaker stock market could be indicative of greater trader aversion to risk which could trigger more buying in the Dollar and the selling of higher risk, higher yielding currencies like the Euro.

Look for the Euro to weaken this week as traders may begin to price in an aggressive rate cut or some form of aggressive quantitative easing by the European Central Bank at its next meeting on April 2 in an effort to revive the Euro Zone economy

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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