The euro is heading higher in forex trading on the currency market today as things improve in terms of global economic data. Helping the euro right now is the fact that U.S. retail sales showed improvement in February. This has many speculating that the U.S. really is on the road to recovery, and risk appetite is returning.

Also helping the euro is the fact that the euro zone nations are putting together plans to help prevent another sovereign debt debacle like Greece. And concerns about the Greek financial contagion are abating. GFT's Boris Schlossberg reports in FX360 on events in the euro zone:

Euro continued its short covering rally into the weekend, clearing the key 1.3740 level after several European officials lent their support to the creation of a European Monetary Fund that would be able to deal more effectively with future funding crises of its member nations.

See Also

• Euro in Forex Trading
  Forex trading on the currency market

Will a better than expected nonfarm payrolls at the end of last week, and with the recent hike in the Fed discount rate, it looks as though things could be picking up for the economy, and the Fed is preparing to exit from stimulus measures. 

As a result, there is a great deal of speculation surrounding when the Fed might begin raising interest rates. GFT's Kathy Lien offers insight into this matter in FX360:

According to futures contracts, the market is pricing in a 28 percent chance of a 25bp rate hike in August and a 42.3 percent chance that the rate hike will come in September. By the end of the year, there is a 68 percent chance that rates will reach 0.75 percent. ... [T]here is a very strong chance that interest rates will remain below 1 percent come January 2011. This is good for the U.S. economy because low borrowing costs encourage investment and spending. It will also be good for the dollar simply because outside of the Reserve Bank of Australia, the Fed is the only central bank that has toyed with interest rates (albeit the deposit rate only) which suggests that they are the closest to raising rates again.

With the Fed expected to raise rates again in the near future, and Europe and Britain expected to remain behind the curve due to their slower recovery and deficit problems, there is a chance that the dollar might retain its relative strength for a while longer.

See Also

• Looking for Trends in Forex Trading
  Currency trading on the FX market

The euro is struggling in forex trading as events continue to keep the 16-nation currency weak. Indeed, the euro is down in currency trading on the FX market while the pound actually makes headway against the U.S. dollar -- something that hasn't happened for quite some time.

Euro is struggling in currency trading due to the fact that the  ECB's policy statement after yesterday's announcement of keeping rates steady clearly indicates that it will be some time before rates rise.

Additionally, it is not helping matters that Greek workers are on strike again, protesting the austerity plan that the government is trying to implement.

See Also

• Euro in Forex Trading
  Currency trading on the FX market