Forex Trading: factors that plague the euro

The euro has attempted a slight rise Friday after the declaration of the European countries participating in the G20. Investors are still worried about sovereign debt hanging over Ireland.

While the euro hit a low of Thursday 6 weeks against the dollar, the European currency has again taken on Friday, the threshold of $ 1.37.

However, the European currency had dropped to 1.3574, a level she had not seen since late September.

Fear of European sovereign debt

The market weakened by the financial situation of Ireland, is also concerned about the difficulties that Spain, Italy and also Portugal and Greece.
For Ireland, investors fear that the Irish government can not reduce the deficit the country is one of the largest in the eurozone.

In response to these concerns, interest rates on government bonds to 10 years Ireland jumped nearly 9% this week.
It was not until December that the Parliament adopts austerity measures.

Assessment of the G20

The G20 meeting will not relieve the foreign exchange market. Five of the countries invited to the G20, Germany, France, UK, Italy and Spain have issued a statement in Seoul to restore confidence to markets. However, no major decision was taken by countries. Only the commitments undertaken in late October were reconfirmed in Seoul. Thus, countries will seek not to devalue their currency to benefit their exports. They also pledged to encourage greater exchange rate determined by the markets.

Growth mixed

Other factors also hinder the market. The growth rate in the euro zone slowed in the third quarter. It is up 0.4% in the third quarter against 1% for the period April-June

Only Germany, with GDP up 0.7% for the quarter but below expectations of 0.8%, driving growth. The French GDP, meanwhile, rose 0.4% while the consensus expected 0.3%.

The Forex market heavily impacted

The forex market is currently affected by this "currency war" reacts to all types of information be it economic or political conditions in general. The market is therefore subject to significant volatility.

The foreign exchange market operates in pairs. Thus, a currency appreciates or depreciates always compared to another. By buying the EUR / USD, you bet on a rising euro against the dollar. Conversely, if you anticipate a fall against the dollar when you sell the pair.

CFD Forex can lead to losses greater than your initial deposit. Forex and CFDs are not suitable for all investors. So be sure that you fully understand the risks inherent in such operations.