By: Barbara Zigah
The Euro continues to decline as the Eurozone crisis lingers on; thus far in a light trading week, the Euro has lost 1.5% of its value against the U.S. Dollar, much of it triggered following Wednesday’s disappointing German bond auction. As reported at 11:52 a.m. (JST) in Tokyo, the Euro was down 0.2%, trading at $1.3315 but improved from the overnight low of $1.3311 struck on the EBS trading platform. Markets expect the common currency to drop more in the coming months, though investor short covering could slow the decline and likely result in a good deal of volatility. One FX analyst in Singapore believes that they are now seeing a trend of money being purposely reallocated out of the Eurozone, rather than just panic selling.
The worry has escalated now, as many investors felt that the outcome of the German debt auction would encourage the leadership to ease up on its insistent opposition to the possibility of a joint Eurozone bond, as well as to allowing the ECB to take a larger role in the crisis. But Angela Merkel’s position remains unchanged, even after Portugal, another Eurozone member, was downgraded to junk status, leaving many to wonder what Germany’s real intention is vis-à-vis the Eurozone.