The Euro Continues Its Decline

The euro fell to a seven-month low in Asia and had the biggest fluctuation of any currency on concern the rejection of a proposed European Union constitution will slow the region’s economic integration…………

Against the dollar, the euro fell to $1.2370, the lowest since Oct. 14. It bought $1.2390 at 2:05 p.m. in Tokyo from $1.2475 late in Asia yesterday, according to electronic currency- dealing system EBS. The euro will probably decline toward $1.22, Jacobs said.

Update I: Now it’s hit $1.2371.

The euro’s initially muted reaction to the French vote on a holiday-thinned Monday turned into a sharp fall when it broke below key $1.2450 levels, pushing as low as $1.2371.

Now it’s at 1.2315, and this is also becoming a dollar rise story as the yen is also begining to fall against the USD.

The Euro lost support at 1.2450 in Asia on Tuesday and this pushed the Euro down to a low of 1.2315. The convincing break below 1.25 against the US currency will reinforce negative Euro sentiment and will raise speculation over a move towards the 1.20 level in the medium term.

To be continued.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

4 thoughts on “The Euro Continues Its Decline

  1. “Nice news but we are still far than US$1 :-(”

    Well yes, a long way to go, I’m afraid, but our political leaders seem to be talking it down by the minute :).

    I think in general a 1:1 euro/USD would in fact be beneficial for the EU economy. Actually the ECB may take the view that this is the easier way of doing it than raising rates on Thursday.

  2. As long as it’s above parity, I’m happy. Wild fluctuation is a risk in international trade. At least a lower euro should help us export.

  3. Inflatory pressure is going rise. We won?t have the benefit of the rising euro to dampen oil/gas price hikes.

    As long as the process is gradual things should be ok. Almost 1 cent a day is high though. This shouldn?t go on too long.

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