Forex Club: EUR/USD at 1.27 by end of September

The euro could reach 1.27 against the dollar by the end of September, according to Andrey Dirgin, head of research at Forex Club.

The European currency has touched today a seven-week high against the US dollar, and is now trading at 1.253, after the Federal Reserve hinted at more monetary easing in the United States.

On the European side, French and German business activity surveys exceeded expectations.

According to Dirgin, future decisions on the European Stability Mechanism are likely to have a major impact on foreign exchange markets in the coming months as liquidity will become a key issue for investors, due to the appreciation of long-term financing in the global economy.

Pavel Kasparov, analyst-instructor of the International Academy added: “Investors are setting more and more requirements not only to the profitability of investment vehicles but also to their stability in a crisis situation. Traditionally popular saving instruments such as bank deposits and real estate no longer meet the growing expectations of investors,” he said.

The current situation in the eurozone has led to rising sovereign debt rates for Southern European countries, euro volatility, and to increasing risk of a collapse of the economics of the European Union.

“In this environment of growing risks, not all investment instruments show the same yield growth. Bank deposits and investment in real estate provide investors with a low yield in an environment of heightened risk and at a level below the risk-return demands of investors. That’s why there is an increasing demand for investment vehicles that combine greater returns with a higher resistance to the financial crisis,” Kasparov added.

Next week, Investment Europe’s ‘Focus on’ will be on currencies.

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