The ECB (European Central Bank) action has seen bringing positive results in the market, boosting euro and taking it to its peak for the second time against the dollar. The optimism gripped the currency market and euro bounces to the second highest in comparison with the US dollar. Market analysts are quite upbeat about this development and they foresee more trades in the market following the euro bounce. The ECB President Mario Draghi announced that the bank will cooperate with the euro zone bailout funds to resolve the crisis.
The ECB has come up with a plan to handle the worsening economic situations in Spain and Italy. The efforts are to reduce the borrowing costs in these two nations by buying bonds, and consequently market opened on a positive note witnessing euro’s two-day gain in the market. The euro rose to its highest against the dollar in last nine months and market experts have held ECB’s efforts responsible for this euro gain.
Earlier on 6th August, the euro recorded a one-month high in comparison to the dollar, and it rose further from the Friday’s value when the market uses to be very illiquid, in general. In midday trading, the euro recorded a value of $1.2414, which is 0.2 percent higher than the dollar. However, in the Asian trade, euro recorded its peak value as $1.2443. Since July 5 it recoded the strongest value of the euro and the 2 percent two-day gain of the euro is the best two-day gain since last October.
In London, all euro trading witnessed an irregular trading while a single currency strengthened its position in the market. The gains in stocks helped improving the optimism with lower risk anticipation.
The ECB plan for improving the euro zone situation brought back the confidence of the panicky investors. The ECB plan gave a clear hint of a positive expectation and investors started searching for attractive assets. “The depression of the past several weeks in the European asset market is over now”, reveals one of the binary options brokers. “Euro benefits by the ECB’s efforts of risk aversion”, he added.
However, despite the ECB’s proposed action plan, a common apprehensive sentiment prevails in the market. Unless the crisis of the euro zone is resolved completely, many investors may not be encouraged enough by the euro’s bounce and may not start trading afresh in the market.
Currency strategists however agree that a dual sentiment prevails in the market and investors are more apprehensive in placing fresh bets whereas shorter-term traders are more interested in trading in euros anticipating the currency’s upward movements. Many traders are however feeling relieved that the ECB is ready to act to resolve the crisis that is prevailing in the euro zone. While at the same time, many are not sure that the ECB’s efforts will be alone sufficient to bail out and lead euro to a sustained development. Amidst such mixed sentiments, the market is however opening on a positive note.