Euro Falls on Risk Aversion

Euro is losing ground, dropping below the 1.30 mark against the US dollar, as risk aversion returns to the markets. Forex traders are concerned about what’s next in the eurozone drama. A recent auction in Italy, of six-month bond issues, went well, but some are worried about what happens at Thursday’s longer-term Italian auction.

On top of that, there is still skepticism about what’s next for the eurozone. While new fiscal rules have been agreed to, there are still disagreements amongst some of the leaders in the eurozone, notably differences in the way France and Germany want to handle things. Nicolas Sarkozy and Angela Merkel have met a number of times to work things out, but questions still remain.
For now, this is providing weakness for the euro in Forex trading. The 17-nation currency is heading lower as traders worry about what’s coming in 2012, and shift to the relative safety of the US dollar. With stocks lower today, in thin trading, and with uncertainty surrounding the eurozone situation, it’s really not much of a surprise that the euro has dropped, extending its yearly losing streak. There is a good chance that the euro ends the year down overall.
At 15:26 GMT EUR/USD is 1.2968, down from the open at 1.3070. EUR/JPY is down to 100.9460, from the open at 101.7950.

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