Possibility of Euro to decline further

The euro finished the week down against the US dollar, but the bulk of the pair’s decrease happened on Friday after the introduction of better than anticipated US non-farm payroll outcomes. EUR/USD fell around 200 points and finished under trend-line and psychological support at 1.4000, indicating that from a technical viewpoint, supplementary decrease might be coming up for the pair. There is as well probably for EUR/USD decrease from a basic viewpoint considering the European Central Bank’s (ECB) latest conference.

The ECB left rates unmoved at one %, and ECB President Jean-Claude Trichet’s succeeding press meeting at first provided some support for the euro, since he described existing rates “appropriate” and stated that latest data indicates that the Euro-zone slump can have hit the bottom throughout the preceding 2 quarters.

Dollar Around 09′ Record Low as Risk Appetite Grows

The dollar continued its bearish trend against a basket of currencies after a report on U.S. pending home sales posted the third consecutive monthly rise, improving optimism on markets and extending the current risk appetite wave.

Commodity-linked currencies like the Australian dollar and the Brazilian real continued their rally against the greenback as confidence emerges about the world economic rebound, spurring demand for oil and several metals. U.S. pending home sales report had the highest jump in a 7 year period, and being considered as one of the key factors for an eventual economic recovery, this report fueled demand for riskier assets both in stock and currencies markets, consequently downgrading attractiveness of safe-haven currencies like the dollar and the yen. Since the global recession has been showing solid evidences of easing, the greenback is losing versus commodity-linked currencies like Canada’s dollar, and also against higher-yielding options like the euro.

Analysts affirm that not only the world economic rebound is weighing on the dollar outlook, but also the growing questioning on the dollar’s position as a world reserve currency. Since the beginning of the global slump, multiple statements from different governments and economists suggested that the dollar should be substituted as the main global reserve currency, this kind of declarations bring a certain amount of instability for the greenback, consequently weakening the North American currency.

AUD/USD traded at 0.8196 from 0.8070. USD/CAD remained rather stable at 1.0878 after a sharp fall in the beginning of the week. USD/BRL fell to 1.9230 from 1.9430.

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