Dollar update on the 21/05/12
Commentary:
The Euro plunged to a fresh four-month low against the U.S Dollar, extending declines to a third straight week, amid concern that the sovereign debt crisis is worsening. The single currency weakened to the lowest level in three months versus the Yen, as investors flocked to the relative security of lower-yielding assets, after Fitch Ratings downgraded Greece's long-term credit rating.
The ratings agency cited heightened risk that the struggling nation may not be able to sustain membership in the monetary union. The Euro traded at 1.2655 yesterday, the weakest level since January 17th, as the market's concern about contagion and Spain came into focus. The Euro has weakened 1.9% against the Dollar in a week, the longest stretch of declines since January 13th.
The G8 summit helped support the Euro to a degree going into the weekend and the communiqué affirmed that there was interest in Greece staying in the Euro, but the evidence of divisions continued to fuel expectations of a Greek Euro exit. There was some speculation that market sentiment was shifting and that there could be a rally in risk appetite of Greece does in fact exit the Euro.
Forecast:
|
Currency
|
Current
|
1 month forecast
|
3 month forecastÂ
|
6 month forecast
|
12 month forecast
|
|
EUR/US dollar
|
1.277 |
1.254 |
1.267 |
1.310 |
1.324
|
Sources:
http://finance.yahoo.com/q?s=EURUSD=X
http://www.forecasts.org/euro.htm
www.torfx.com