No Relief for Forex Traders as Condition of European Economy Worsens

The Effect of the Crisis

The debt crisis in the Euro zone has reached such a level that a number of major economies like Spain and Greece are on the verge of complete collapse. The respective governments are trying their best to figure some way out of the crisis but the austerity measures demanded by global lenders have made the general public so disappointed that they have resorted to violent protests in order to flaunt their anger. Experts opine that the worst is not yet over and the situation is going to get even worse before it gets better.

The Worsening Condition

Euro zoneThe economic condition in Europe seems to be getting worse day by day. There has been a drop of 2.3 percent in the Gross Domestic Product of the Euro zone in the fourth quarter. Analysts are of the opinion that the contraction in the European economy may indicate that the market prices have become detached from the fundamentals of the region. The GDP in Spain and in Italy fell at the rate of 2.8 percent and 3.7 percent annualized rate respectively. The contraction in Greece and Portugal was even deeper. However the main concern about Italy is that the economic depression in Italy may lead to a political instability in the country which in turn may reignite the Euro zone crisis. On the other hand the Euro touched the lowest point in three weeks against US dollar, falling to $1.3329 in US trading.

Europe’s Stoxx 600 index closed at 287.79 by sliding 0.2 percent. The DAX in Germany also staged a fall of 1 percent to close at 7631.19.

Analysts’ View

It will be untrue to say that analysts are not that much concerned about the situation. In fact, they are opining that the European economy is likely to contract further in future and is going to give rise to more tense conditions. In such a scenario forex traders must trade carefully.

Forex traders are in a more tense market disposition than before. Therefore, they have to plan each and every business move in such a way that they can earn profits from this trade in such a volatile economic situation. They should avoid speculations and rumors in order to avoid losses.

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