Monday, 20 Dec 2010

Irish Debt Worries Continue to Threaten Euro

Investors largely abandoned the euro today, as fears remained that the Irish debt crisis could soon spread to other parts of the euro-zone. The EUR/USD pair fell below the 1.3100 level earlier today, and has only managed to stage a slight recovery since. Currently the pair is trading around the 1.3120 level. The euro also tumbled to a series of record lows against the Swiss franc. Currently the EUR/CHF pair is trading around the 1.2665 level. In addition, both the safe haven yen and UK pound managed to extend their already substantial gains on the 16-nation currency today.

Tomorrow, traders will want to pay careful attention to any information the ECB may provide with regards to a plan to combat the Irish debt. Barring any concrete evidence that the euro-zone intends to tackle the problem in the very near future, the currency is likely to drop further tomorrow. Traders can expect the EUR/USD to go back below the 1.3100 level, and may even test the 1.3000 resistance level. Furthermore, the yen will more than likely maintain its current bullish trend against the euro. With the EUR/JPY pair already trading below the 110.00 level, expect further downward movement in the days ahead.