Saturday, May 14, 2011

EUR/USD 1,4119

The Euro was the worst performer among majors in the market for the second week in a row. EUR/USD fell 270 pips after plummeting 520 pips on the previous week. The pair reversed sharply on Friday and tumbled from 1.4340 and bottomed at 1.4065, hitting a 6-week low. The European currency finished on Friday hovering around 1.4100 weakened by risk appetite and worries about debt problems in Greece.

“The Euro has been moving in lock-step with equities recently (as well as oil) and so the risk-off trade was in full effect as the EUR/USD fell through the 1.41 area. With lingering concerns about what happens with Greece yet to be decided by EU members, traders do not want to hold EUR”, said Nick Nasad, fundamental analyst at FXtimes.

Regarding Eurozone debt problems, the Danske Bank affirmed in its weekly report: “Greek finances seem unsustainable, and the risk of restructuring – which could lead to losses in the European banking sector and a sell-off of EUR – is ever-present. However, our euro economists expect further loans to be extended to Greece, so avoiding or at least deferring such a scenario”. They anticipate some normalization of the EUR risk premium in the coming months. “In this context, it should also be noted that our short-term model for EUR/USD, which is based partly on relative interest rates, gives an equilibrium exchange rate above 1.46”.

source: fxstreet.com

10 comments:

  1. Wow that's almost 800 pips in two weeks...not a good sign for the euro.

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  2. So are you saying that our money is going to the pooper?

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  3. It seems like Greece is more often the not a big source of instability in the European economic scene. It makes me wonder why exactly they hang on to Greece and shun productive nations like Turkey.

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  4. really interesting analystic .

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  5. looking nasty in greece, hope all goes well

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  6. Greece will default sooner or later...

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  7. Things haven't been doing so well lately it seems. Hope it picks back up soon.

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  8. Read an article about some arrest affecting the price of the Euro. Google news it. Might be relevant to your blog.

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  9. wow, poor euro! thanks for the post

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