Thursday, May 13, 2010

Euro Stumbles, Raising Fresh Fears Of Collapse

LONDON (Dow Jones)--The euro appears to be at risk of an ugly decline Thursday, as a fresh wave of selling has abruptly shoved the currency under $1.26 against the dollar.  The short-term support to the 16-country currency from the super-size aid package agreed over the weekend has now evaporated. Any further weakness in the euro, particularly below key levels of support, could easily trigger a very sharp drop.  "I'm surprised that we have not seen any rebounds in the euro," said Ian Stannard, a currencies analyst at French bank BNP Paribas in London.  "The outlook is very bearish, and I can't see anything to stop the euro coming under heavy selling pressure," Stannard said.  Already, the currency has dumped by nearly 1% from the day's high point against the dollar, to hit a low of $1.2562. It has also come within a whisker of a fresh record low against the Swiss franc, and it has fallen fast against the yen.  The closest noted low-point in the euro against the dollar from here is $1.2510--the 14-month low seen earlier this month. A decline below there would leave the currency open to a drop towards $1.23. Beyond that, chart-watching analysts eye a drop to $1.16.

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