The European common currency may experience further declines in the beginning of 2010 against currencies like the Canadian and the U.S. dollar, as well as the Swiss franc, as concerns regarding the financial health among the bloc members fuel negative speculations in trading markets towards the euro.
The euro had the sharpest drop versus the dollar in December after Standard and Poor’s downgraded Greece’s credit rating for the second time this year, affirming as well that further drops may follow, affecting the attractiveness for the euro in currency markets drastically, as not only Greece, but other bloc’s members like Spain and Italy are facing several problems in their financial systems, forcing investors to opt for other currencies regionally, like the Swiss franc, which traded below 1.50 euro last week for the first time since March. Traders are also moving their capital to overseas positions in Canada and the U.S. and their dollars economies are providing more favorable economic data lately.
The euro is under pressure, even if a strong economic recovery in already a reality in countries like France, Germany and Netherlands, a big part of the bloc’s members has been severely affected by the credit crisis last year and is still struggling to revive their economies, decreasing appeal for the region’s common currency in a global level.
EUR/USD ended this week trading at 1.4390. EUR/CHF closed at 1.4892.
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