The EURO fell below a benchmark $1.29 against the USD, the lowest trading point for almost 4 months. Analysts opine the fall is in most part due to the stalled coalition talks in Greece aimed at dealing with the burgeoning debt crisis and that investors are seeing the USD as a relative safe haven against other currencies and economies that show greater vulnerability.
In Greece, leaders announced over the weekend that the latest round of talks to bring together a unity government had stalled, preventing the hoped for reform being implemented that would keep the country on the path to debt reduction. ?Many EU leaders and analysts are widley forecasting a Greek exit from the EURO-ZONE should the current round of coalition talks fail to bear fruit.
If the latest round of coalition talks are accepted as a failure the country will return to the ballots and for the second election this year.
In Germany, Euro woes continued as German Chancellor Angela Merkel’s party suffered a humiliating defeat in a Sunday election which appears to be empowering the leftist opposition parties to increase attacks on her austerity policies.
With these factors and increasing negative news from Spain, traders can expect the EUR to weaken against all major currencies during the week, with traders possibly continuing to opt to head to the USD to protect their trades.