Euro Surges as Dollar Falls
The euro continues to reach record highs against the dollar, reflecting widespread fears that the U.S. is headed for recession.
Having burst through the $1.53 mark in early March, negative sentiment toward the dollar and sustained strong performance from the eurozone conspired to drive the euro to further record-breaking intra-day highs of $1.5904 on Monday 17 March.
While failing to recapture these giddy heights subsequently, with the Fed releasing promising figures regarding falls in unemployment, the euro has nevertheless hovered around the $1.58 mark. However, news of the eurozone's record-breaking 3.5% CPI revealed on Monday March 31 March has led some analysts to predict that the euro may rise to $1.64.
The eurozone's sustained performance has allowed the ECB to keep interest rates as they are, while the Fed has been forced to reduce interest rates to ward off the spectre of recession.
Competitive spreads on dollar crosses
However, with hints that some European banks may have been affected by the sub-prime credit crunch more than first thought, is the dollar ready to rally back against the euro? Whatever your view you can take a position on the greenback with our wide range of forex pairs. Our spread on spot EUR/USD is just 2 pips, while we quote 3 pips on the dollar versus GBP and JPY.
Alternatively you might consider a EUR/USD option. If you think the dollar is due a rally over the week, 'buying' a Weekly EUR/USD put option gives you the right to sell EUR/USD at a particular strike price at the end of or during the week.
With options your risk is limited to the premium you pay and as with our standard Forex Trades, there is no commission to pay and our quote is 'all-in'.
For further information see our Forex and Forex Options page.
The above comments do not constitute investment advice and IG Markets accepts no responsibility for any use that may be made of them.
04/01/08