Euro is dropping rapidly against most of its major counterparts. With the uncertainty over Cyprus, and with Italy once again with its back to the wall, trouble is looming for the 17-nation currency.
The risk of capital flight is weighing on the euro today, and the 17-nation currency is heading to four-month lows against the US dollar as a result.
While the euro attempted a rally earlier, that is all but gone now. Concerns about what happens when Cyprus reopens its banks (after being closed for nearly two weeks) are on the rise. Additionally, there are worries that the bailout deal for Cyprus means that the private sector will continue to be on the hook for other eurozone bailouts.
On top of this, focus is moving back to Italy, where a ruling government has yet to be formed. As the negotiations drag out, the ability of Italy to meet its financial obligations weakens. Between Cyprus and Italy, attention is firmly on the periphery, and the eurozone economy doesn’t appear to be in any shape to overcome the difficulties.
At 14:43 GMT EUR/USD is down to 1.2767 from the open at 1.2856. EUR/GBP is down to 0.8452 from the open at 0.8481. EUR/JPY is down to 120.4045 from the open at 121.5550.
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