Tuesday, 11 May 2010

Euro Tumbles Following Return to Risk Aversion

Following a brief return to risk taking, the Euro has again tumbled against its major currency rivals. Speculation of a Euro recovery was quickly dashed today as investors determined that the Greek bailout package passed over the weekend may not be enough to stabilize the troubled currency. After peaking close to the 1.3100 level yesterday, EUR/USD has dropped significantly to its current level of 1.2690. Similarly, EUR/GBP has tumbled since yesterday, falling from a high of 0.8743 to its current level of 0.8587.

Low market volatility is expected for the rest of the day, due to a lack of significant news events. That being said, traders will still want to pay attention to the major currency pairs, as risk aversion is still the prevailing sentiment among investors. The Euro has the potential to drop further today, while analysts are predicting the safe haven Yen to increase its already substantial gains.