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Euro Loses Ground on Risk Aversion

January 3, 2013 at 15:05 by Miranda Marquit

Euro banknotes and coinsEuro is heading lower today, losing ground as risk aversion returns to the Forex market. Concerns about the next big budget battle in the United States are already surfacing, and that is weighing on risk appetite, and sending the euro lower.

In the eurozone, concerns about recession are still lingering in the background. And, thanks to renewed concerns about the future, German Bunds have steadied after a recent sell-off. The news indicates a move toward safety, and that means that safe haven currencies are going to be preferred to high beta currencies like the euro.

Yesterday, the euro surged as excitement over a partial fiscal cliff deal sent risk assets soaring. However, now there is a more sober view of things. The IMF has said that the partial deal doesn’t do enough to address the long-term problems fort he United States. On top of that, Forex traders have settled down enough to realize that there is still the spending portion of the fiscal cliff to deal with, as well as the debt ceiling problems in the United States.

With that uncertainty cropping up again, the euro is headed lower as risk aversion appears.

At 15:02 GMT EUR/USD is down to 1.3104 from the open at 1.3186. EUR/GBP is down to 0.8107 from the open at 0.8112. EUR/JPY is down to 113.9745 from the open at 115.1700.

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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