Risk aversion turns EUR bearish
- Last Updated on 16 February 2012
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The euro tumbled against its safe-haven currency rivals yesterday, following news that approval for a Greek bailout package has been delayed. The news caused investors to abandon the euro in favor of safer assets, such as the US dollar and Japanese yen. Earlier pledges by China to keep on buying European debt were largely ignored following the Greek news. The EUR/USD fell below the psychologically significant 1.3100 level, while against the JPY, the common currency dropped over 100 pips during the afternoon session.
Turning to today, traders will want to continue monitoring the Greek situation for clues as to where the euro will be heading. With the bailout deal currently in question, the euro may have a hard time reversing its bearish trend. In addition, fears that Greece could still default on its debt even if it secures a bailout deal do not bode well for the euro. That being said, with China maintaining that it will continue to buy euro-zone debt, the common currency may be able to stabilize against its main rivals.