Dollar Targets at 2012 High; Euro under Pressure

The euro dropped to a four-month low, extending losses against the dollar in Asian trading hours amid concerns the euro area’s debt crisis is deepening. Pair EUR/USD has already touched 1.2655, the lowest since January 17, while EUR/JPY fell to 100.22, the lowest since February 6. Yesterday the rating agency Fitch downgraded Greece’s long-term credit rating to CCC from B-, indicating “the heightened risk that Greece may not be able to sustain its membership of Economic and Monetary Union” before the nation faces new parliamentary elections in June. Rising borrowing costs for Spain at yesterday’s medium-term auction also added pressure on the single currency. Another international credit agency Moody’s Investors Service downgraded yesterday 16 Spanish banks.

The US dollar on the other hand is accelerating gains against the majors, but the Japanese yen, lifting the dollar’s index, used by Intercontinental Exchange, toward the 2012 high at 81.784. By the end of the Asian trading session the Aussie dropped versus the US counterpart to the lowest since 25 of November 2011 - 0.9794, the British pound weakened to a two-month low of 1.5732. The greenback also strengthened against its northern counterpart, the loonie, to 1.0226, and to 0.9490 versus the Swiss franc – both values are the highest since January. Probably the only major currency outperforming the dollar in May is the Japanese yen. Pair USD/JPY fell yesterday evening to a three-month low of 79.13, having lost almost 0.7% from the beginning of May. The worst performer is the Australian dollar, which has lost almost 6% versus the greenback in May.

Dollar Targets at 2012 High; Euro under Pressure - 18.5.2012

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