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Divergence, Risk Aversion Weigh on Euro

April 6, 2016 at 14:39 by Miranda Marquit

Euro banknotes rolled upEuro is trading mixed against its major counterparts today, falling against the dollar and the yen as risk aversion continues. Many also expect to see a revival of the divergence trade between the dollar and the euro. The 19-nation currency is higher against the pound, though, as the sterling appears on the verge of collapse.

Forex traders and analysts are waiting for the release of minutes from the latest meetings of the ECB and Federal Reserve. Many expect to see signs of divergence in the minutes, and that could lead to more euro weakness against the dollar, especially if it looks like the Fed is preparing to tighten.

Of course, the euro had a rather strong quarter for the first part of 2016, even in the wake of continued stimulus from the ECB. Questions about what will really send the euro down against the dollar are being raised.

For now, the 19-nation currency is lower as risk aversion sets in. Stocks are broadly lower, and gold is dropping, which generally means a lower euro, especially against the dollar.

At 14:36 GMT EUR/USD is down to 1.1381 from the open at 1.1385. EUR/GBP is higher, gaining to 0.8077 from the open at 0.8040. EUR/JPY is down to 125.3160 from the open at 125.6020.

If you have any questions, comments, or opinions regarding the Euro, feel free to post them using the commentary form below.

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