Euro May Fall Further After Monthly Drop

The start of 2010 was rather grim for the European single currency as consumer confidence and economic acceleration decreased in the European Union, adding to the negative sentiment spread in markets but some of the bloc’s members raising budget deficits.

The Eurozone has been shunning investors as multiple countries using the single currency like Ireland, Portugal, Italy, Spain and specially Greece are having a hard time to tighten the gap on their national accounts, as budget deficits seem, according to some analysts, out of control. Greece’s situation, which already involved speculations suggesting that the country should leave the euro, is likely to impact the outlook for the currency even further, as its budget deficit is breaking record highs consecutively, and as other nations using the euro are likely to follow the same path.

The situation for the euro doesn’t look great, specially after the economic rebound slowed down in the region, combined with a stronger sentiment of risk aversion globally and after most investors started to avoid banking sector equities in multiple countries using the euro. The Euroland may experience new record lows, specially versus refuge currencies, if risk aversion remain high among forex traders.

EUR/USD traded at 1.3876 as of 01:16 GMT. EUR/JPY traded at 125.30

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