Earlier, euro saw a bit of a tentative rally in Forex trading, gaining a little ground against the US dollar. Now, though, all of that momentum is gone, and euro is heading lower.
Indeed, euro has dipped below the 1.3500 mark, heading down through another psychological barrier as the situation in the eurozone continues to be dire. So far, the installation of Mario Monti as Prime Minister and Finance Minister in Italy hasn’t stemmed the tide of negativity. He has a number of challenges to overcome, and they are unlikely to go away anytime soon.
The earlier rally was helped along by the ECB‘s decision to purchase Italian, Portuguese and Spanish bonds in an attempt to slow the rising bond yields. However, the move was only temporarily successful. Bond yields are climbing again. It is clear that Forex traders and investors don’t believe that eurozone leaders have a true solution to the sovereign debt crisis.
For now, risk aversion is the dominant factor. EUR/USD has been flitting around the 1.3500 mark for most of the session, dipping below that area before inching back higher for brief periods.
At 16:51 GMT EUR/USD is slightly above 1.3500, at 1.3505, still down from the open at 1.3539. EUR/GBP is higher, at 0.8564, up from the open at 0.8559. EUR/JPY is lower at 104.0210, down from the open at 104.3095.
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