The EUR appears to be in a depreciation cycle as it lost value to most of its currency counterparts last week, and has continued to do so throughout today's early trading hours. Dropping to as low as 1.3400 against the USD, and falling further away from parity with the British Pound, the EUR is experiencing an economic weakness thought to be near its end, but now apparently stronger than ever.
Fear that the recent energy crisis in Eastern Europe may spread farther as the winter cold front takes hold has analysts predicting a cold, dark and dreary economic output in the days ahead. Last week saw a continuation to Germany's declining industrial output and climbing unemployment, which leads many to believe that the Euro-Zone is much further from economic recovery than many other parts of the world.
The inter-connectedness of the countries in the Euro-Zone means that the powerful economies like France and Germany have to be able to produce surplus when its smaller member states falter. Yet, lately, every economy in the region has fallen short of its required output. Decrying the collapse of the European Monetary Union (EMU) may be a step too far, but it doesn't prevent some analysts from doing so. As the smaller economies go bankrupt, the larger economies must pick up the slack, or face a larger economic meltdown. This puts much more pressure on France and Germany than they would prefer, especially considering that they are not producing the necessary figures to prevent such a catastrophic outcome. Could we be witnessing the beginning of the end for the EUR? Such a prediction is still too far away to be anywhere near accurate.
Glancing at this week's economic news it will be important for traders to pay close attention to the various speeches European Central Bank (ECB) President Jean-Claude Trichet will be giving in the run-up to Thursday's decision on regional short-term Interest Rates. It is being forecast that the ECB will slash its Minimum Bid Rate from 2.50% to 2.00%, continuing with the recent reduction to global Interest Rates.