Euro-zone meeting may lead to heavy trading day
- Last Updated on 15 February 2012
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The euro tumbled against virtually all of its main currency rivals yesterday, following the credit downgrade of several EU countries. While the move by Moody's Investors Service was not unexpected, investors still responded to the news by reverting back to safe-haven assets. The EUR/USD dropped as low as 1.3126, while against the Japanese yen, the common currency fell to 101.81.
The euro saw some relief later in the day, after the German ZEW Economic Sentiment came in well above the expected level. While the indicator led to moderate gains for the euro, the currency was not able to sustain its bullish momentum and eventually dropped again.
Turning to today, the main news event is likely to be a meeting of euro-zone finance ministers. The meeting will determine whether Greece will finally receive an EU bailout package it needs to avoid defaulting on its debt. While most analysts are convinced that the bailout will be approved, Greece still has to show how it plans to make additional budget cuts before any decision is made. Additionally, not all analysts are convinced that even with the bailout Greece will be able to avoid default. Regardless, tomorrow's trading is likely to be heavily influenced by the meeting. Positive news may lead to a boost for the euro.