Jean-Claude Trichet continues to send hesitant signals. This is bad for the Euro. The Euro could dive to the mid 1.20s next week, as the situation in Europe is dire. Very dire.
Last week, most markets were closed due to the Easter celebrations – Good Friday. The Euro didn’t enjoy Good Friday, and it went down against the dollar. Low inflation, high unemployment and declining exports hurt the Euro zone, and the European currency.
In my post last week, I asked:
Will Jean-Claude Trichet do some extreme moves to help the European economy? Will he join the “forex war“?
According to his behavior in the past, such as the European rate decision, this is unlikely to happen.
Well, after a week, the answer is no. In his speech today at the Research Institute of Japan, in Tokyo, Jean-Claude Trichet didn’t rule out unconventional measures. Good start? Well, in the same breath, Trichet said that there needs to be an “exit strategy” to the crisis, that the world needs to prepare for the day after the crisis.
This remark meant that the slow, cautious, hesitant policy will continue. Extreme, unconventional measures are bad for the Euro in the short term, but do show leadership.
With Trichet continuing to hesitate, continuing to anger Europeans and to cause disagreements in the ECB, the Euro suffers.
Today, EUR/USD was trading at the 1.30s, the lowest this week. This week, and especially this Friday, were thin with economic indicators in Europe and in the US. There was no big event to push the Euro over the edge, under 1.30.
But the Euro got ready. Next week, the Euro can start lower, with a weekend gap, or plunge later on, after important data is released. Stay tuned for the Forex Weekly Outlook, due during the weekend.
I continue to be Euro bearish. Berlin’s symbol is a bear. Does that say something? 🙂
For more on the Euro’s uncertainty, I highly recommend reading Lena’s article at Spike Charts.
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