Apr 23 2008
The EUR/USD Breaches 1.60
The U.S. economy is facing fresh difficulties that will probably further dampen the national currency. Yesterday, the greenback tumbled to fresh lows trading as low as 1.6022 vs. the EUR after the European Central Bank policy makers signaled they may raise Interest Rates due to inflation concerns.
The USD extended its drop against the EUR following the low printing of the US Existing Home Sales in March. Falling house prices and rising mortgage risks continue to slow the U.S. economic growth. As a result of shrinking sales, builders are forced to pare back construction and reduce prices.
A tumbling dollar also prompted investors to purchase commodities. U.S. Crude Oil rose yesterday to a record 119.90 a barrel in New York, gaining on a Nigerian supply disruption and a U.K. refinery strike threat. Crude from Nigeria, Africa’s biggest producer, is low in sulfur and is prized by U.S. refiners because of the proportion of high-value gasoline it yields. The falling dollar and higher global demand for raw materials have led to records this year for commodities including gold, corn, soybeans and rice.
Today, there is no significant news expected from the U.S. markets. Traders should closely watch the fundamental data from the Euro zone as it may determine the future USD direction. Today, we may expect another volatile trading session for the greenback. There is a possibility that the dollar will further weaken, finally stabilizing above the 1.60 mark against the EUR.
