The euro's recent turn follows the release of negative German economic data midweek, an announcement by Banque de France that the country could suffer a shallow recession, and news that Spain's industrial production dipped for a 10th straight month, by 6.3% in June following a decline of a revised 6.5% in May.
As a spread betting investor, the recent swings in the value of the euro against a basket of currencies, including sterling and US dollar, could enable you to net a tidy profit.
Where next for the euro?
On Wednesday, August 8, France's Central Bank stated that it expects the country to fall into a recession in the third quarter, with output likely to contract further, with a fall of 0.1% between July and September.
Data out of Germany, meanwhile, revealed that industrial production slid by 0.9% in June; while Spanish industrial production figures slumped for the 10th consecutive month, heralding new fears for the eurozone's fourth-largest economy.
As a result, the euro snapped a three-day winning streak against the US dollar, falling to $1.2356 late on Wednesday, while the euro also fell against the sterling to a rate of £0.7895.
Take a spread betting position on the future direction of the euro
With spread betting, you can net a potential profit from any price swings in the single currency against a basket of currencies in the coming days. In order to net a profit, you simply need to determine whether you expect the euro to stabilise and reverse course, or continue falling against another currency, for example pound sterling or US dollar.
For example, if you expected the euro to slip lower against, say, the pound sterling in the coming days, you would take a short position on EUR/GBP and you would net a profit for any falls in the euro against the British pound below your sell price. If, on the other hand, you expected the euro to strengthen, you would go long EUR/GBP and you would profit from any rise in the value of the euro against the British pound past your buy price.
With spread betting, you would profit so long as prices move in the direction you had anticipated (ie the euro rises and you had gone long EUR/GBP or the euro falls and you had gone short EUR/GBP). If, however, you were wrong and prices moved in the opposite direction, you would net a loss.
Spread betting and forex trading are leveraged products with the risk that you could lose more than your initial investment. Please consider risk management tools such as a guaranteed stop loss to help manage your risk when trading.
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