March 11, 2011 - Written by John Cameron
STORY LINK Foreign Exchange Rates - EUR/USD on the Slide While GBP Suffers Following BoE Rate Decision
The Euro Dollar exchange rate (EUR/USD) is 1.3788 . The Euro Pound exchange rate is 0.8614
A huge earthquake of 8.9 magnitude has struck the North-Eastern part of Japan in the last few hours. The quake has led to fires in Japan’s capital city and caused a huge Tsunami, which the Red Cross warns is larger than several Pacific Islands. A wide-ranging Tsunami warning has been issued across a massively wide-ranging area, which covers the Pacific coast of Russia, The Philippines and Hawaii.
This natural disaster is the latest in a series of events which has caused a severe dip in appetite for risk in global markets – these include the Arab uprising and Europe’s burgeoning sovereign debt crisis. The effect of these events has been to cause a marked downturn in equities markets. The benchmark S&P 500 index in the US has moved downwards by almost 3% since Wednesday’s close and Asian markets have suffered even greater losses.
Meanwhile, in the Eurozone, yesterday’s German trade balance numbers for January came out worse than expected, placing pressure on the Euro. Analysts will be closely monitoring comments emanating from the meeting of 17 Eurozone leaders, which takes place in Brussels today. The aim of the meeting is to formalise an agreement between the 17 nations on how to fund future bailouts for nation states suffering sovereign debt difficulties. If the meeting fails to come up with a workable solution, then the Euro will come under further selling pressure and the flight to safety in global markets may be accentuated.
The EUR/USD pair continues to retrace from the four-month high of 1.4036 that it reached on Monday. The near-term price target is now 1.3600, a level at which the pair did a lot of work at the start of February. Negative sounds from Brussels throughout today’s session could see us get there.
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