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Euro Drops on Speculation that Eurozone Economy is in Recession

April 2, 2012 at 13:23 by Miranda Marquit

Stack of one-euro coins on a chartEuro is lower today, dropping as speculation arises regarding the eurozone economy, and the possibility of recession. Manufacturing in the 17-nation currency zone has contracted for the eighth month in a row, and unemployment is at a level not seen for 14 years.

Economists and analysts are speculating that the eurozone has slipped into a recession. While it will be a few weeks until all the data can be compiled to create a picture of the eurozone’s economic growth (or contraction) in the first quarter of 2012, some think that the continued loss of jobs, as well as the shrinkage in manufacturing, indicates that a recession is in the mix.

These worries have sent the euro tumbling against the US dollar as Forex traders look for safe haven and security. Besides, the US economy is showing signs (albeit small signs) of recovery while the eurozone struggles. It is little surprise that traders prefer the greenback right now to the euro.

This turn of events could also likely mean that focus will, once again, turn to the debt crisis that doesn’t yet seem to be resolved. Spain is the next country of concern, and many are waiting to see if the situation in Greece actually improves.

At 13:20 GMT EUR/USD is lower at 1.3285, down from the open at 1.3362. EUR/GBP is lower at 0.8301, down from the open at 0.8338.

If you have any questions, comments or opinions regarding the Euro, feel free to post them using the commentary form below.

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