US Dollar Pulls Back on Spanish Bailout

The announcement that eurozone leaders are ready to bailout Spain is boosting risk appetite today, and sending the US dollar lower. Even though some of the euro’s gains have been pared since the news was announced, greenback is still mostly lower in Forex trading. US dollar is heading down as Forex traders consider that the euro might not be doomed after all.

Once again, the volatility of the Forex market is asserting itself as traders consider what is next. The US dollar, which saw some solid strength last week, is starting out the week a little lower. However, even though the greenback is showing some weakness, a lot of the advantage that high beta currencies saw from the Spanish bailout news is dissipating. Euro is slipping against the US dollar, and the UK pound is off its highs.
Even with the bailout of Spain, it isn’t certain that things will settle down. The US dollar is still likely to remain in demand, to some degree, for some time as the world tries to figure out where it’s headed next. What happens in Europe is going to be a big part of that, and greenback as a safe haven will be important to many.
At 14:07 GMT EUR/USD is down to 1.2546 from the open at 1.2640. GBP/USD is higher at 1.5533, up from the open at 1.5513.

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