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 The euro didn’t have a good start in 2010 confirming the negative predictions made by financial analysts. There were some strong reasons to believe that euro will have a bad year, but the reality overcomes the predictions. The two factors that influenced negative the euro evolution where easy to see: the recovery of the United States economy and the financial problems of some European Union members.
It was easy to anticipate that the economic recovery of the United States will make the dollar much more attractive to investors and speculators disadvantaging the European currency. Once some of the EU members started to announce their economic and financial problems, everyone expected the euro to depreciate as a normal response.
The worst part is that bad news is not over for the euro. The immense bailout that the small Greek economy required as help, convinced all analysts that larger economies like Spain, Portuguese and Italy cannot be saved in case of similar crisis. This disappointment is translated in further negative predictions, some analysts even predicting that the euro will equal the dollar. Even if this is not true, traders and investors will probably continue to bet on the US dollar, making things worse for the euro. Another factor that started to influence negative the Euro is the internal conflict between the major European Union members. Rumors about a conflict between France and Germany show that in this dark period, when the solidarity should be stronger, the relations between European Union members are more insecure than ever. All these factors influence the euro, making it weaker. Is very difficult to predict exactly where the euro will go, but is clear that will not recover very soon from this dark period. |
