Valentine’s Day Bad News for the Euro

Tuesday February 15, 2011

Valentine’s Day kicked off with some bad news for the European single currency. But this news was not exactly brought to us as a result of one or two days of bad results for the currency.

Instead we saw that the day was just one more day on top of all the other poor performances the Euro has put in against the US dollar recently. Back at the start of February the Euro was bagging 1.3692 against the US dollar. It even managed to climb further to 1.3755 on the first day of February, before improving still more in another leap up to 1.3803 the following day.

But this was about as good as it would get for a while at least. In the subsequent days the Euro didn’t seem to have what it took to get the exchange rate to run in its favour. Instead the US dollar started to gain some strength against the single European currency and it made a big difference to the eventual exchange rates we saw at the end of each day.

By the end of the first week in February the Euro was down to 1.3631 and it didn’t look as if it would be able to pick up for a while either. In fact if anything the second week got even worse. By the time we got to Friday 11th February the Euro could grab just 1.3524 against the US dollar. Did this mean the rest of the month would go in the same direction?

It remains to be seen whether the Euro will be able to pick up the pace during the second half of the month. The changes seem to be largely due to trading changes, with traders becoming sceptical of trading with the currency at present. Events in certain parts of Europe could swing things around in the opposite direction though, creating a two part month where the second part has the potential to get better for the Euro. However the second half could also be worse – it just depends on what happens next.