Euro-Zone Concerns Turn EUR Bearish

The euro gave up some of its recent gains against its safe-haven currency rivals yesterday, as doubts regarding the European Central Bank's ability to combat the euro-zone debt crisis resulted in risk aversion in the marketplace. After hitting a one-month high at 1.2442 when markets opened for the week, the EUR/USD turned bearish and eventually dropped as low as 1.2341. The pair was able to make a slight recovery, and spent most of the day trading around the 1.2390 level. Against the JPY, the euro fell more than a 100 pips after markets opened, eventually hitting 96.68 before bouncing back to the 97.00 level. Today, euro traders will want to continue monitoring announcements out of Spain. Analysts are warning that Spanish government is moving closer to requesting a full bailout package to aid its troubled banking sector. Any signs today that the request will soon be made could weigh down on the common currency for the foreseeable future. In addition, if the ECB continues to avoid outlining a clear plan to combat the debt crisis in the region, the euro may extend yesterday's bearish trend.

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