The euro once again started this week on a very stale note. The EURJPY opened at 113.144 and is now trading lower at the 111.787 area. Similarly, the fiber or the EURUSD commenced today’s exchange at 1.25794. Presently, though, the pair is moving weaker at 1.2378 minutes before the beginning of the US session. With the futures on the S&P 500 still on the red territory, it looks like the EUR is bound for another trek lower against the ‘safer’ greenback and samurai yen at least for today as soon as the bell in Wall Street rings.
Earlier today, the EUR resumed its journey down south on fears that the debt crisis in the euro zone has more bad stories to tell. In fact, just this weekend, the Bank of Spain has placed CajaSur, which is a savings bank that has been whacked by loan defaults, under a close monitor until it is able to solicit a much needed financing of about €99 billion or $123 billion from the government. These recent defaults in Spain, even if it was with the private sector, adds to signs that debt crisis could really be spreading across the entire European Union (NYSEARCA:EU).
Going back to Greece, some economists and analysts like me still believe that the whole situation in the EU is still far from over. Even if Greece is able to seek some aid from its peers in the region and from the IMF, Greece still needs to pay them back. It’s because what they are doing now is simply borrowing some more in order to pay for their upcoming dues. So the only way for them to repay their new debt is by domestically producing some income. With the proposed spending and budgets cuts, however, and a contracting economy, it would take them a longer time before they are able to do so. Until then, Greece and maybe the entire euro zone will remain in a fragile state.
So what does this mean for the almighty anti-dollar, the euro?
Well, it looks like the greenback and the yen are going to be its daddies for quite some time. Both the EURJPY and EURUSD could gradually head lower until the state in Europe stabilizes. Will the EUR reach parity with the dollar? I don’t know for sure but I tell you this… it’s not too farfetched.
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