Monday, 23 May 2011

EUR/CHF Falls to a Record Low on Debt Concern

The euro weakened against most of its major currency rivals on Monday's trading session on a growing concern that the euro-zone's sovereign-debt crisis will deepen, decreasing demand for the shared currency.

The euro is dropping on concern that Portugal may be on the verge to seek an aid package and that Greece may soon ask to be bailed out for the second time since the economic crisis began. What's enhancing these concerns is the relatively weak growth of the region, which means that the euro-zone might not be able to offer a fiscal solution to these nations.

The EUR/CHF fell by 100 pips today and reached a record low of 1.2322. The 17-nation currency depreciated against the U.S. dollar as well, and the EUR/USD reached a daily low of the 1.3970 level.

Looking ahead to tomorrow, traders are advised to follow the German Business Climate release, which is scheduled at 08:00 GMT. A positive reading above the expected 113.9 has potential to strengthen the euro and to erase today's losses on prospects that the German economy is advancing in a faster pace than expected.