Mizuho Corporate Bank: Eurozone finance ministers meeting may disappoint the market

On Tuesday (November 29), at the beginning of the European market, the euro/dollar fell slightly and the exchange rate fluctated around 1.3350.

Dai Sato, senior vice president of the foreign exchange division at Mizuho Corporate Bank, said on Tuesday that the market should not give too high expectations to the euro zone finance ministers' meeting. Judging from past experience, the results of such meetings are mostly disappointing.

The finance ministers of the 17 countries of the euro area met in Brussels on the 29th to study how the European Financial Stability Mechanism (EFSF) can increase its firepower. EU leaders are working hard to prepare for the December 9 summit to regain investor confidence.

However, Sato said that even if the results of the finance ministers' meeting are not very optimistic, the euro is unlikely to fall sharply, because near the end of the year, market participants hope to respond positively to the news to smooth out short positions. They do not want to leave short positions. After Christmas and New Year.

A report from the US Commodity Futures Trading Commission (CFTC) shows that net short positions of euros held by speculators last week reached the highest level since June 2010.

Sato said that during the rest of the week, liquidation by speculators may provide support for the euro around 1.3100, while the EUR/USD upside may be limited near 1.3500.

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