EUR Resumes Bearish Trend

Following a brief upward correction during overnight trading yesterday, the euro once again turned bearish as concerns regarding Spanish debt weighed down on the common currency. The EUR/GBP, which had reached as high as 0.8035 during early morning trading, turned bearish over the course of the day and eventually dropped as low as 0.7987. Against the Canadian dollar, the euro opened the week by gaining close to 50 pips during the Asian session. The common currency was not able to hold onto its gains, and proceeded to tumble some 70 pips during European trading. Turning to today, euro traders will want to pay attention to any developments out of both Greece and Spain regarding their respective political and economic crises. Any additional negative developments are likely to weigh down on the euro and could even bring it within reach of its recent two-year low against the dollar. Later in the week, traders should monitor the results of the Italian 10-y Bound Auction. Any indications that the euro-zone debt crisis is spreading to countries like Italy may result in further losses for the euro.

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