Euro Pushes through Support to fall to 11 Month Low As Euro Debt Crisis Continue
The Euro dropped to an 11 month low of 1.2965 on Wednesday after speculations that the Euro Zone countries can possibly be downgraded as a quick solution to the debt crisis remains elusive. The fall of the Euro came even as Germany and Italy failed to find enough buyers for new bonds at their respective auctions. Investor, instead, chose to focus on the highest cost to borrow of Italy since the Euro was first launched.
The problems of the Euro helped push the dollar to an 11 month high against a basket of other currencies as investors flocked to the most liquid currency in the market. The drop after the successfully completed auctions shows that traders are looking to sell the Euro at any bounce. Analysts expect the Euro to fall further if investors continue to be pessimistic about the Euro and the Euro zone’s health. As a result, the market has been preparing a mass downgrade of the region’s countries with lots of speculation that a France downgrade could come soon.
The US dollar index went as high as 80.593 with the Euro struggling. The dollar was also strong against the Swiss Franc with a 9 year high and slightly bested the Yen as it traded at 78.11. As expected the US Central bank has not planned to add on to its easing measure, postponing it for next month as expected.