Euro Goes Down on Speculation that Debt Crisis Threatens Spain

The euro headed down today amid the speculation that the European Union and the International Monetary Fund prepared the bailout for Spain, fueling the concerns that the European sovereign-debt crisis threatens to contaminate European countries.

The rumors suggested that the EU and the IMF, together with the U.S. Treasury, prepared the 250 billion euro loan for Spain. The governments of Spain and the EU later dismissed these rumors. Nevertheless, the analysts say that the euro’s rally was merely a correction, caused probably by short covering, and the currency would renew its downfall, possibly to as low as $1.15.

EUR/USD fell to 1.2283 as of 11:15 GMT today from the opening price of 1.2332. EUR/JPY dropped to about 112.39 down from its opening rate of 112.76.

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