EUR/USD Update – Race to Bottom Resumes as Central Bankers Ease Anew: Currencies




Good day forex traders and readers.

The EUR/USD is now testing the immediate resistance of 1.34 and a breach of it may open up 1.3480 next. We need to be on the look out for any bullish uplift.

In the meanwhile find below an interesting article on how the various central banks are trying to ease their currencies so as to limit any raise in their value. As I always mention, a currency too high in value may affect the country export performance and hence it is often a balancing act between a currency’s strength and the export economy. Find out more below :



Czech Koruna

The global currency wars are heating up again as central banks embark on a new round of easing to combat a slowdown in growth.

The European Central Bank cut interest rates last week in a move some investors say was intended in part to curb the euro after it soared to its highest level since 2011. The same day, Czech policy makers said they were intervening in the currency market for the first time in 11 years to weaken the koruna. New Zealand said it may delay rate increases to temper its dollar, and Australia warned its Aussie is “uncomfortably high.”

“It’s a very real concern of these countries to keep their currencies weak,” Axel Merk, who oversees about $450 million of foreign exchange as the head of Palo Alto, California-based Merk Investments LLC, said in a Nov. 8 phone interview. ECB President Mario Draghi, “persistently since earlier this year, has been trying to talk down the euro,” Merk said.

With the outlook for the global economy being downgraded by the International Monetary Fund and inflation slowing to levels that could hinder investment, countries and central banks are revisiting policies that tend to boost competitiveness through weaker currencies. Mantega’s ‘War’

The moves threaten to spark a new round in what Brazil Finance Minister Guido Mantega in 2010 called a “currency war,” barely two months after the Group of 20 nations pledged to “refrain from competitive devaluation.”

“We’re seeing a new era of currency wars,” Neil Mellor, a foreign-exchange strategist at Bank of New York Mellon in London , said in a Nov. 8 phone interview.

The ECB lowered its main rate on Nov. 7 by a quarter-point to a record 0.25 percent, a move anticipated by just three of 70 economists in a Bloomberg survey. Draghi said the […]

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