10 December 2002, 14:12  Euro could fall back sharply: analysts

Analysts have warned that the euro could be in line for a swift reversal of fortune, despite another jump in value by the single currency this morning. The euro has climbed 0.25pc against the dollar in early trade, as the greenback remains under pressure following last week's huge jump in the US jobless rate. However, analysts at Bank of Ireland Treasury and International Banking have pointed out that figures from Europe this week paint a similarly downbeat picture and that the German economy could contract in the current quarter. The European Commission has already warned that the eurozone could shrink in the first three months of 2003. "Data published yesterday served to remind of the difficulty the euro faces in pushing ahead. German industrial production fell by a massive 2.1pc on the month in October," said Michael Crowley. "The very weak start to the quarter raises the possibility of a negative GDP reading in the fourth quarter." He also noted that the latest IMM data continues to show extreme long positions in the euro against the dollar, suggesting "some vulnerability" at current levels of USD1.01. //www.fxcentre.com

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