When we talk about currencies, the US Dollar and the Euro dollar are the first ones that come up to mind, and no wonder, since these two currencies are the most commonly used and accepted. Due to their high liquidity ratio, some forex traders don’t even consider trading other currencies and only deal in the aforementioned currency pair.
In this article, some light will be shed on either currency, on how they might perform in the current year. Predicting and forecasting of euro dollar and US dollar with logical reasoning.
Euro Dollar Past
If we look back at 2010, it was a bad year for the Euro dollar, just plain bad. It came to such a point where it was trading almost as a direct exchange with the US Dollar. After a subsequent recovery, the euro dollar is now trading around $1.4. The problem that the weaker forces of the Euro zone faced, the big players were able to endure.
The financial crisis in Greece bought the attention of the whole of Euro zone and they had to be bailed out in order for them to survive. Similarly, Ireland had a minor bailout. The Euro zone dodged one bullet but what about the remaining bullets in the magazine!
Euro Dollar Present & Future
The year 2011 may not be so kind to the Euro zone if things keep on going the way they are. The country now facing a key economic encounter is Spain. A country much larger in every way than Greece, Spain is facing unemployment rate of 20.4% and huge debts. Greece was saved by a bailout, but the probability of a Spanish bailout is as much as that of a pirate is sentenced to death by the Somali government.
The demise of Spanish economy would not only hamper Spain itself but the euro dollar too. Meanwhile, other important economies of Euro zone like the Italian and that of Portugal may also require some aid for stability.
These challenges may become all to challenging for the euro dollar and might result in lower euro dollar prices.
US Dollar Past
On the contrary, we have the US dollar. The US dollar is now showing signs of recovery after the global recession and financial crisis of 2008. The economic indicators are showing positive indications.
US Dollar Present & Future
The current phenomenon of very low interest rates will not give the USD much room to maneuver among the more healthy currencies, but, slowly and surely, interest rates will begin to rise meaning people will pour their savings into banks and increase the reserves. When this theory will be applied, the value of US Dollar will eventually begin to rise.
Conclusion
To some it all up, the euro dollar has a tough task in its hand because first it was Greece and Ireland. Spain caught the attention of the whole world in 2010 for good reasons after winning the FIFA World Cup, it made the Euro zone proud, but in 2011, will it become a reason for Euro zone’s shame? As for the US Dollar, it saw the trough, experienced it, and dribbled past it. It can now look forward to some good times. The euro dollar forecast for 2011 is a forecast nevertheless but it might come true until and unless the Euro zone has planned up some alternatives to counter the challenges.
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