EURUSD FUNDAMENTAL ANALYSIS

15 Jan 2015

the forecast about EUR is extremely negative in my opinion. The problems that Eurozone can't solve may lead to an extreme fall of this pair. For example, the negative inflation is one of the most serious problems in Eurozone. ECB has taken many measure with any result at all. So, a new QE might be the next option. However, this could lead euro at very low points such as 1.11. A new QE would lead the exchange rate of EURO vs other strong currencies lower due to the following reasons. ECB wants to raise the amount of Euros in the markets in order to increase inflation. So, we might think that a QE might be a good solution. It would be IF the psychology of the markets about the structure of Eurozone was better. Euro is a strong currency, nobody can doubt it. However everyone knows its structure its quite weak. The markets feel the "fear" therefore a new QE would lead the bankers and the investors ,who are responsible for the increase in money supply, in other markets such as Japan or China. (developing markets). So the final result would be zero increase in money supply (therefore inflation would continue being negative) and and decrease in the spot rate of euro. This is my personal opinion. I am waiting your comments. :)

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