Euro’s charge higher stalls

The two most obvious issues that the US dollar and euro will face are the eventual start of Federal Reserve tapering and the next round of bailouts required by member states in the European Union.

Last week’s comments from the Fed have perhaps shifted the perceived view of the extent to which the central bank emphasises the importance of improving economic data as a catalyst to change. The never-ending ‘will they, won’t they’ dance may have helped to shake out some of the more jittery EUR/USD traders, but ultimately most will have to trade on fact and not speculation.

The EU has breathed a collective sigh of relief that there is ongoing stability in Germany following Angela Merkel’s election success. The general consensus is that the SPD party will form a coalition with Ms Merkel’s CDU party, and many in the south of Europe will be hoping that this will mean a little less pressure being placed upon them.

There are market fears that a number of issues will resurface now that this major hurdle has been cleared. For example, we know that the Greek government has not been as successful at tackling its debt as the troika would want.

Spot FX EUR/USD (DFB) chart

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