After an earlier recovery during the European trading session today, the euro has once again come under an extraordinary amount of pressure.
The markets appear to still be rattled from yesterday’s announcement that ratings agency Standard & Poor’s were downgrading Greek and Portuguese sovereign debt. Today, more fears regarding the common currency were realised when Standard & Poor’s also downgraded the sovereign debt of Spain. While this cut still leaves Spain’s rating well above the junk level that Greece was downgraded to yesterday, the negative outlook and implications of a spreading contagion of debt problems left the EUR reeling. As of this writing, the EUR/USD pair is trading at levels not seen in a full calendar year. On the technical side, there is only a small bit of potential support near 1.3100, but below that there is a long way to drop. Considering the weight of the fundamentals, it would be extremely difficult to try and play any type of bounce up.