DailyFX Analysts Incorrectly Bet Against The Euro To End May, Where Do They Stand Now?

John Rivera, Currency Analyst strategist@dailyfx.com
On Thursday June 11, 2009, 11:46 am EDT

DailyFX analysts started souring on the Euro too early as the single currency rose by 700 pips against the dollar and yen to end May. The EUR/USD and EUR/JPY both set yearly highs during this period and have continued to trade higher.
A bickering ECB over the future of interest rates and quantitative easing measures generated questions on whether the central bank would be able to agree upon a strategy that would lift their economy pout of the current recession. There were already fears that policy makers where behind the curve is responding to the crisis which would lead to a prolonged recovery for the region. This outlook for the Euro came under question with the lack of direction and a 2.5% contraction in first quarter GDP. However, optimism began to rise as the global economy showed signs that the worst of the credit crisis had past and stability was returning. A jump in the German Zew survey to 31.1 from 13 underlined the building confidence which helped fuel risk appetite and ultimately the Euro continuing to trade higher. Rising equity markets and improving cyclical indicators such as the PMI composite rising to 43.9 from 41.1 also added to support for the single currency.