Euro Drops After The ECB Reality Starts To Sink In

The Euro dropped versus the US Dollar during trading on Tuesday after notching up two consecutive days of solid gains. The fall came as investors suddenly grew cautious that the proposed European Central Bank plan to tackle the region's debt crisis may lack any real detail.
The ECB are scheduled to meet on Thursday and are expected to announce a bond-buying plan to help lower Spanish and Italian borrowing costs. Time will tell how much of an impact the meeting will have.
The markets remain fixated on Thursday's ECB Meeting, with expectations of intervention running high. Other risk events due throughout this month also continue to weigh on the Euro's performance.
Other factors still influence the Euro in the short term, one of which is that Germany's Constitutional Court is set to rule on the legality of the European Stability Mechanism (ESM), the Euro region's permanent bailout fund, next Wednesday. Given the weight that the ruling will carry, the ECB may well delay giving full details of any bond buying plan until after the ruling.
Also due for release today, is a final reading of an index based on a survey of purchasing managers in services industries in the Euro area by Markit Economics. This could confirm a drop to 47.5 in August from 47.9 in July. If so, the figure will be further below the 50 level which indicates economic contraction.
Ahead of the ECB meeting tomorrow, the Euro earlier fell 0.3% to $1.2523 and by 0.4% to 98.16 Yen. The Yen itself was little changed at 78.39 to the Dollar.