The euro extended its decline today against the U.S. dollar and the Japanese yen, plunging below $1.20 for the first time since March 2006, as the signs that the European fiscal crisis is widening caused the investor to abandon the shared 16-nation currency.
The prospect for the default in Hungary added to already vast list of evidences, which confirm the expansion of the crisis. The spokesman Peter Szijjarto said:
The moment of truth has already arrived in Greece and it has yet to come to Hungary. The government is prepared to avoid the road that Greece has been down; in other words, we wonât hesitate to act after the truth becomes known.
The possibility of the crisis’ expansion left no other choice for the traders than to seek safety in currencies like the dollar and the yen.
It looks like everything is against the European currency, and even the good news seems likely to be followed by even more bad news. The Europe’s woes influence the markets and the currencies all around the world, but the euro itself feels the heaviest impact as there are not many favorable fundamentals, like in such countries as Canada, to support the currency.
EUR/USD plunged to 1.1965 today as of 20:34 GMT after it opened at 1.2161. EUR/JPY dropped to about 109.71 from the opening rate of 112.74.
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