While tension in the Middle East affected oil prices last week, growing concern regarding Greece’s financial stability recently caused international currency markets to fluctuate significantly. As the U.S. economy continues to show signs of strengthening, and consumer confidence levels keep trending upward, now is an opportune time for investors to once again get involved with online trading.
On Monday, March 30, the U.S. dollar rose substantially as the euro dropped, according to Reuters. The European currency weakened due to widespread worries surrounding the ongoing negotiations in Athens, where some estimate the country could run out of cash in three weeks if it is unable to secure aid. At the same time, Germany requested a more detailed list of reforms, and Greek representatives reportedly sounded optimistic about their discussions with creditors to release a portion of funds of the 240-billion-euro aid package.
Although a recent report showed that confidence levels within the euro zone economy had risen to its highest point in nearly four years – and a positive reading on German inflation spurred hopes that deflation likely won’t occur – the euro is being pressured by the rising dollar, the news source noted. As the policies of both the Federal Reserve and European Central Bank increasingly diverge, it remains to be seen if the euro will decline further and become equal with the greenback before 2015 ends.
“That’s a pretty strong headwind for the euro,” Richard Franulovich, senior currency strategist at Australian bank Westpac Banking Corporation, told Reuters.
Euro drops against dollar, gains versus yen
After Fed Chair Janet Yellen’s March 27 comments emphasizing the fact that interest rates would being gradually increasing in the coming months, the dollar index improved the following Monday, the news agency reported. The gauge of the greenback’s value against a number of currencies rose 0.7 percent on the tail of several weeks of back-to-back losses. Meanwhile, the euro fell 0.45 percent against the dollar at $1.0839. This represents a quarterly drop of 10.4 percent – the largest on record in nearly seven years. Against the yen, the dollar was up 0.8 percent at 119.98 yen, and the euro climbed 0.2 percent to 129.88 yen.
Eyeing the forthcoming Department of Labor report due for dissemination April 3, some online currency trading experts told MarketWatch that they’re trying to avoid establishing strong positions.
“All in all, the likely scenario this week is for more dollar consolidation, unless we get a significant surprise in the U.S. employment report,” said a Société Générale note on FX strategy, according to the website. “We expect the higher dollar trend to reassert itself medium-term, but for now range trading is likely to predominate.”
With the dollar showing gains against both the European and Japanese currencies, those looking to get involved in the markets are well positioned to succeed. While investing is inherently risky, current conditions stand to benefit those that make intelligent financial decisions. As the U.S. economy continues to expand, opportunities to make money through investing are likely to be plentiful.