Greece faded from the spotlight for a little while, but the erstwhile country is back on center stage as debt talks once again look to be on the verge of collapse. As a result of uncertainty in Greece, and due to other issues in the eurozone, it is little surprise that the euro’s recent rally has lost momentum.
Euro is lower today as risk aversion takes the place of yesterday’s risk appetite. Concerns about Greece are intensifying as debt talks break down. European Union leaders want Greece to sign an austerity pledge, but Greek leaders are balking. On top of that, Standard & Poor’s just downgraded two French banks, Societe Generale and Agricola. This downgrade of two of France’s three major banks underscores the downgrade of French sovereign debt not too long ago.
All of this is undermining risk appetite. The euro, which yesterday broke through the 1.30 level against the US dollar, is now heading lower on the Forex market, and back below that psychologically important level. Downward pressure is expected to continue as uncertainty about what’s next remains in Europe, and as concerns about what’s happening the United States weighs on sentiment in general.
At 15:15 GMT EUR/USD is lower at 1.2982, down from the open at 1.3018. EUR/GBP is lower at 0.8328, down from the open at 0.8359. EUR/JPY is actually a little bit higher at 100.9785, up from the open at 100.2520.
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