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EUR/USD: Growing Appetite For Risk Benefits The Euro

By ForexNov 26, 2012 07:40AM GMT Add a Comment
 
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Increased appetite for risk boosted the euro versus the US dollar in the previous European trading session as economic data from the US and Germany reduced worries over the world economy, and on increasing hopes of a Greek agreement this week. In contrast, the greenback dropped as markets became more willing to buy riskier assets because of improving prospects for the global economy. With the recent positive risk environment, the single currency is seen to go higher than the buck in today's European trades.

The Eurogroup finance ministers meet in Brussels today for a third time to forge a deal on how to make Greece's debt program a sustainable one, so that loan funds would be disbursed to the indebted country in time for its debt repayments in December. Despite the leaders' failure last week to reach a deal, market optimism returned when German Chancellor Angela Merkel expressed confidence that a decision would be reached this week. Hopes further strengthened when French Finance Minister Pierre Moscovici told BFM Television that the leaders are very close to a solution. The unexpected rise in German business confidence is also seen to sustain risk sentiment as it reinforced optimism that the Euro Zone is weathering an economic slowdown.

US consumer spending over the Black Friday weekend also boosted appetite for risk as US shoppers spent around 59.1 Billion US dollars, a National Retail Federation (NRF) survey conducted by BIGinsight showed. With the getting-better global economic conditions, investors' appetite for riskier assets is seen to grow, reducing the appeal of the greenback as a safe haven currency. Taking into account all these factors, a long position for the EUR/USD pair is recommended in today’s European trading session.
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