The Euro struggled to cover ground on Tuesday as more worries over Spain's hasty bank bailout added to fears about elections that may determine Greece's future in the Euro Zone.
The Euro was down against the Japanese Yen, with the major players exiting long positions on the pair. The US Dollar also inched down against the safe-haven Yen, coming off the previous day's high.
Is Italy Next?
While Spain's banking bailout poses more questions than answers, the market's focus shifts now also to upcoming Greek elections and to Italy as the next potential risk. The Yen moves down as the IMF declares it to be moderately overvalued.
Now, market players are already looking beyond Spain, the Euro zone's fourth largest economy, and focusing on debt ridden Italy as being potentially next in line for a bailout.
Many analysts are of the opinion that should Italy need saving, then the whole Euro project would be in grave danger and that Euro zone countries would then look to Berlin to save Italy.
Italy faces a test on Thursday, when it will put up as much as 4.5 billion Euros of fixed rate bonds at its mid month auction.
All these factors saw the Euro trade below its Monday high of $1.2672, at $1.2499 earlier today. This though was still a safe distance from the two year low of $1.2288 hit earlier this month.
The Euro was down against the Japanese Yen, with the major players exiting long positions on the pair. The US Dollar also inched down against the safe-haven Yen, coming off the previous day's high.
Is Italy Next?
While Spain's banking bailout poses more questions than answers, the market's focus shifts now also to upcoming Greek elections and to Italy as the next potential risk. The Yen moves down as the IMF declares it to be moderately overvalued.
Now, market players are already looking beyond Spain, the Euro zone's fourth largest economy, and focusing on debt ridden Italy as being potentially next in line for a bailout.
Many analysts are of the opinion that should Italy need saving, then the whole Euro project would be in grave danger and that Euro zone countries would then look to Berlin to save Italy.
Italy faces a test on Thursday, when it will put up as much as 4.5 billion Euros of fixed rate bonds at its mid month auction.
All these factors saw the Euro trade below its Monday high of $1.2672, at $1.2499 earlier today. This though was still a safe distance from the two year low of $1.2288 hit earlier this month.
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