Wednesday, 24 Mar 2010

EUR Hard Hit after Portugal Rating Downgrade

EUR/USD experienced a free-fall today after a rating downgrade for Portugal added to worries over debt levels. The pair is currently trading at 1.3336, down more than 130 pips today and at a 10 month low.

Even better than expected results from the German business climate did not help EUR Investors are demanding a solution to Greek debt crisis. Without a bailout for Greece, the Euro may see further drops against its main counterparts. The GBP also fell today after a rating warning largely due to the growing UK deficit. GBP/USD is currently trading at 1.4899, more than 100 pips lower than earlier today.

The U.S. published lower than forecasted new home sales figures today, signaling a full economic recovery will not arrive in the near future. Consequently, the USD should have declined, but as traders fear a weak global economy, they flocked to the greenback and its safe-haven status.