Wednesday, 11 May 2011

EUR/USD Falls to 1.4170 on Concerns Greece Will Seek Additional Aid

The euro fell against most of its major currency counterparts on Wednesday's trading session on speculation that Greece is about to ask for an additional rescue package.

German Chancellor Angela Merkel said yesterday that Greece needs to continue with budget cuts to deserve an extension of its rescue aid. This has boosted risk-aversion in the market, and the euro and British pound weakened as a result.

The 16-nation currency fell to a three-week low against the U.S. dollar as the EUR/USD pair dropped to the 1.4170 level, from 1.4420 during Asia trading. The euro also fell about 200 pips vs. the Japanese yen, and the EUR/JPY is currently trading near the 114.80 level.

Looking ahead to tomorrow, several significant economic releases are expected from the U.S., including the Retail Sales reports, the Producer Price Index and the weekly Unemployment Claims. If the actual results will beat expectations, the greenback might see further bullishness against the euro.