Forex daily analysis 22nd October 2013

The Euro held steady during Monday with no move to attack resistance in the 1.37 area against the

dollar, but there was also solid buying support on any significant retreats. The Euro was still gaining some

degree of support from global safe-haven demands as the currency’s correlation with emerging currencies

dipped to 10-year lows on defensive inflows.

There will be further speculation that the ECB will eventually have to act to loosen policy given underlying

monetary developments which will tend to deter longer-term Euro support. The ECB will also be

increasingly uneasy surrounding the deflationary risks and there will be strong pressure to combat any

further Euro gains given the threat to economic growth.