The Euro has had a positive start to the week as speculation that a deal to extend a second bailout to Greece will be agreed intensifies. An announcement from an EU commissioner said that Greece was “close” to reaching an agreement with it’s creditors. This has given the single currency a boost against both the Pound and the Dollar in the first couple of hours trading this week.
The Euro has been further strengthened with news from the World Economic Forum in Davos that the ECB would not be averse to a further phase of monetary (quantitative) easing in coming months. ECB President Draghi appears to be waiting to see the full effect of the last injection of liquidity before making a final decision but said that “we know for sure we have avoided a major credit crunch and a major funding crisis.” This more lenient approach to quantitative easing has been received well by the markets and I would expect to see the Euro gain strength in the medium to long term as a result.
For anyone who has Euros to sell in the coming months this is very good news as the Euro has been taking a bit if a hammering over the last couple of months and this could be the time to claw back some of the losses we have seen.
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