By: Barbara Zigah
The common currency back off of a 9-week peak against the U.S. Dollar in Asian trading today, as profit takers sold off their short term holdings in the currency. One trader still predicts that the Euro’s trend should be an upward one, however, as speculators tend to build up new positions for a while; it was reported that speculation in the common currency turned long last week, the first such time in nearly two months. As reported at 12:41 p.m. (JST) in Tokyo, the Euro was selling lower against the U.S. Dollar, trading at $1.3596; in the Australia market earlier, the Euro briefly struck a 2-month peak of $1.3648. Over the last two weeks, the Euro has gained approximately 6% on Asian central bank demand.
While analysts are not suggesting that the Eurozone’s fiscal problems are a thing of the past, investor concerns are being minimized somewhat by the awareness that policymakers are ready to act if and when necessary; that is a basis, for the time being at least, for the Euro’s current support. In a similar vein, the fiscal problems in the United States may be edging higher, as more and more states become constrained as a result of the federal tax cuts, with the end result that municipal funding for wide-ranging social programs may soon dry up.