Euro seen stuck near 18-month low on French woes, strategist says
The euro is expected to hover around an 18-month low in the short term, weighed down by France's fiscal problems and political instability, according to Guangda Securities International strategist Tang Lai-hung. She sees technical rebound potential but resistance at 1.132 US dollars, with no immedia
The euro is likely to keep hovering near an 18-month low in the short term, as France's fiscal woes and political instability continue to weigh on the currency, a Hong Kong-based strategist said on Tuesday.
The US dollar index has stayed at around a one-and-a-half-year high, hovering near the 102 level. The euro traded at 1.1156 US dollars earlier, close to its 18-month trough, before paring some losses, according to data cited by RTHK.
Tang Lai-hung, global markets and foreign exchange strategist at Guangda Securities International, said the euro's persistent weakness in recent days is mainly driven by France's fiscal situation and political uncertainty. French bond yields have also surged to near 6 per cent, she noted, adding that with the European Central Bank raising interest rates consecutively, market participants fear a repeat of the eurozone debt crisis.
Tang estimated the euro could see a technical rebound in the short term, but expects significant resistance at the 1.132 US dollar level. Whether the euro can recover further will depend on France's political situation stabilising and whether the government buys back sovereign bonds to curb yields, she said.
However, Tang said there is currently no momentum pushing bond yields down significantly, and she expects the euro to continue trading around its 18-month low in the near term.