Forex News

The euro continued to drop today versus its main trading partners currencies and is going to post another weekly decline as concerns regarding the region’s growing budget deficit are still far from a solution, raising aversion towards assets in the region.

The European single currency declined sharply in a day of strong volatility this Thursday as neither Greek officials nor ECB officials have found a solution to solve Greece’s budget deficit’s issues, in a drama that have been lasting more than traders in the region could expect.

The European single currency posted its first day of decline versus the greenback this week after the regional financial regulator affirmed that some of its stimulus to help the economy to recover will last for as long as they are necessary, declining optimism towards the Eurozone.

The euro has just touched a new record low for 2010 versus the greenback and the yen on speculations that Greece will suffer its first credit downgrade this year, which would follow the two previously suffered last year as the southern European nation started to agonize with its growing budget deficits.

The outlook for the European currency is perhaps the worst since its introduction in 1999, as disparities among Eurozone members’ financial structure is likely to decline the appeal for the currency even further, since measures to bring budget deficits to the ECB’s target are likely to set several countries into a longer recession.

The growing problems of budget deficits are not an exclusivity among EU countries using the Euro, as several of its eastern nations, as in the case of Hungary, have a budget deficit much above the maximum tolerated by the European Central Bank, affecting the nation’s currency performance.

It seems that another week of downtrends has started today for the European single currency, as EU officials suggested that Greece will have to implement a harder budget-cut policy in order to be helped by the bloc’s financial authorities to end its growing fiscal crisis.

The euro tumbled today after an EU summit in which traders were frustrated by lack of initiative from other bloc’s members to help Greece to prevent its budget crisis to worsen, impacting the continent’s single currency attractiveness, as the region’s economic outlook remains uncertain.

The euro rallied significantly versus currencies of its main trading partners today on speculations that the European Union will help Greece to end its financial crisis, affecting the single currency outlook in foreign-exchange markets in a positive way after weeks of pessimism.

The euro declined today versus virtually all of 16 main traded currencies as European Central Bank officials stressed on the economic difficulties faced by multiple countries using the single currency, declining appetite for traders to purchase assets in the region.