This morning the euro remains above the 1.30 level against the US dollar.
With little economic data out from the eurozone today, currency dealers are bullish for the single currency after yesterday’s Spanish bond auction.
Since the end of August the euro has risen over 3% against the greenback. In early September there was much anticipation for Mario Draghi to deliver on his ‘save the euro’ campaign. A fortnight ago he did not disappoint traders when he announced a new bond buying scheme, which sent the EUR/USD above the 1.28 mark.
Across the pond the Fed also launched a new cash injection plan to try and kick-start the ailing US economy. With dollars flooding international markets, dealers had further reasons to back the euro to take advantage of the relative dollar weakness.
Now that we have had two rounds of intervention within a couple of weeks, the question is, where do we go from here? Neither currencies represent particularly strong regions. The last time the US Federal Reserve turned on the printing presses (two years ago) the euro rallied up until the announcement date and then traders started to reverse their positions. Will we see a repeat of this or is the eurozone in a stronger position now than it was in 2010?