Euro is tanking today, heading lower as speculation about a Greek exit of the eurozone increases. Indeed, some think that there is a real threat for Greek withdrawal — and that such a withdrawal could prompt a domino effect that includes Spain and Italy later. Worries about what’s next for the eurozone are sending the 17-nation currency down across the board.
Recently, former Greek Prime Minister Lucas Papademos insisted that a Greek withdrawal from the eurozone is a very real threat, even as he tried to encourage Greek citizens to accept painful austerity measures. Concerns that Greece will be unable to remain in the eurozone are on the rise. Worries are triggering fears of a domino effect as well. Once the first country leaves the eurozone, it becomes easier for other countries to bail as well, and Spain and Italy are considered prime contenders for the spots as the next dominoes to fall.
For now, the main fear is a flight from deposits at banks in countries affected by the sovereign debt crisis. A fight over eurobonds, as well as other aspects of a growth package for the eurozone is being set up, as there are expected to be very big differences between the approach of new French President Francois Hollande and the German Chancellor Angela Merkel.
At 14:03 GMT EUR/USD is down to 1.2645 from the open at 1.2684. EUR/GBP is down to 0.8042 from the open at 0.8049. EUR/JPY is down to 100.4185 from the open at 101.4300.
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